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A SELECTIVE MICROFILM EDITION

PART IV
(1899-1910)

Thomas E. Jeffrey
Lisa Gitelman
Gregory Jankunis
David W. Hutchings
Leslie Fields

Theresa M. Collins
Gregory Field
Aldo E. Salerno
Karen A. Detig
Lorie Stock

Robert Rosenberg
Director and Editor

Sponsors

Rutgers, The State University Of New Jersey
National Park Service, Edison National Historic Site
New Jersey Historical Commission
Smithsonian Institution

University Publications of America
Bethesda, MD
1999

Edison signature used with permission ofMcGraw-Edison Company

Thomas A. Edison Papers
at

Rutgers, The State University
endorsed by

National Historical Publications and Records Commission
18 June 1981

All ri$its reserved. No part of this publication including any portion of the guide and index or of
the microfilm may be reproduced, stored in a retrieval system, or transmitted in any form by any
means— graphic, electronic, mechanical, or chemical, includingphotocopying, recorclingor taping,
or information storage and retrieval systems — without written permission of Rutgers, The State
University, New Brunswick, New Jersey.

The original documents hi this edition are from the archives at the Edison National Historic Site
at West Orange, New Jersey.

ISBN 0-89093-703-6

THOMAS A. EDISON PAPERS

Robert A. Rosenberg
Director and Editor

Thomas E. Jeffrey
Associate Director and Coeditor

Paul B. Israel

Managing Editor, Book Edition
Helen Endick

Assistant Director for Adndnistration

Associate Editors
Theresa M. Collins
Lisa Gitelman
Keith A. Nier

Research Associates

Gregory Jankunis
Lorie Stock

Assistant Editors
Louis Carlat
Aldo E. Salerno

Secretary
Grace Kurkowski

Amy Cohen
Bethany Jankunis
Laura Konrad
Vishal Nayak

Student Assistants

Jessica Rosenberg
Stacey Saelg
Wojtek Szymkowiak
Matthew Wosniak

BOARD OF SPONSORS

Rutgers, The State University of New
Jersey

Francis L. Lawrence
Josepii J. Seneca
Richard F. Foley
David M. Osliinsky
New Jersey Historical Commission
Howard L. Green

National Park Service
John Maounis
Maryanne Gerbauckas
Roger Durham
George Tselos
Smithsonian Institution
Bernard Finn
Arthur P. Molella

EDITORIAL ADVISORY BOARD

James Brittain, Georgia Institute of Technology
R. Frank Colson, University of Southampton
Louis Galambos, Johns Hopkins University
Susan Hockey, University of Alberta
Thomas Parke Hughes, University of Pennsylvania
Peter Robinson, Oxford University

Philip Scranton, Georgia Institute of Technology/Hagley Museum and Library
Merritt Roe Smith, Massachusetts Institute of Technology

FINANCIAL CONTRIBUTORS

PRIVATE FOUNDATIONS
The Alfred P. Sloan Foundation
Charles Edison Fund
The Hyde and Watson Foundation
National Trust for the Humanities
Geraldine R. Dodge Foundation

PUBLIC FOUNDATIONS
National Science Foundation
National Endowment for the
Humanities

National Historical Publications and
Records Commission

PRIVATE CORPORATIONS AND INDIVIDUALS

Alabama Power Company

Anonymous

AT&T

Atlantic Electric

Association of Edison Illuminating
Companies

Battelle Memorial Institute
The Boston Edison Foundation
Cabot Corporation Foundation, Inc.
Carolina Power & Light Company
Consolidated Edison Company of New
York, Inc.

Consumers Power Company
Cooper Industries
Corning Incorporated
Duke Power Company
Entergy Corporation (Middle South
Electric System)

Exxon Corporation

Florida Power & Light Company

General Electric Foundation

Gould Inc. Foundation

Gulf States Utilities Company

David and Nina Heitz

Hess Foundation, Inc.

Idaho Power Company

IMO Industries

International Brotherhood of Electrical
Workers

Mr. and Mrs. Stanley H. Katz
Matsushita Electric Industrial Co., Ltd.
Midwest Resources, Inc.

Minnesota Power
New Jersey Bell
New York State Electric & Gas
Corporation

North American Philips Corporation
Philadelphia Electric Company
Philips Lighting B.V.

Public Service Electric and Gas Company

RCA Corporation

Robert Bosch GmbH

Rochester Gas and Electric Corporation

San Diego Gas and Electric

Savamioh Electric and Power Company

Schering-Plough Foundation

Texas Utilities Company

Thomas & Betts Corporation

Thomson Grand Public

Transamerica Delava] Inc.

Westinghouse Foundation
Wisconsin Public Service Corporation

A Note on the Sources

The pages which have been
filmed are the best copies
available. Every technical
effort possible has been
made to ensure legibility.

PUBLICATION AND MICROFILM
COPYING RESTRICTIONS

Reel duplication of the whole or of
any part of this film is prohibited
In lieu of transcripts, however,
enlarged photocopies of selected
items contained on these reels
may be made in order to facilitate
research.

Legal Department Records
Motion Pictures - Case Files

Greater New York Film Rental Company v.

Motion Picture Patents Company et al.

Greater New York Film Rental Company v.

General Film Company et al.

This folder contains material pertaining to suits brought by the Greater
New York Film Rental Co. against the Motion Picture Patents Co. (MPPCo)
and the General Film Co. in the State of New York and in the federal courts.
Other defendants included Thomas A. Edison, Inc., the Edison Manufacturing
Co., the American Mutoscope & Biograph Co., and other manufacturers
licensed by MPPCo. The cases were initiated in 191 1 and 1914 and involved
disputes over licenses and allegations of monopoly against MPPCo and the
General Film Co. The selected items are primarily from a printed record in the
state case: Summons, Complaint, Affidavits, Injunction and Order to Show
Cause. Several pages bear marginal notations by Edison. Also included are a
few letters regarding the eventual settlement of the federal suit by decree in
1916. Among the items not selected are writs and pleadings; correspondence
relating to legal fees and the progress of litigation; and other letters to and from
the defendant companies.

Supreme Court of the State of New York,

NEW YORK COUNTY.

Plaintiff, ■

Motion Picture Patents Company and others,

Defendants.

SUMMONS, COMPLAINT, AFFIDAVITS, (

INJUNCTION AND ORDER '

TO SHOW CAUSE. ■ *

INDEX.

Injunction Order ’ and Order, to Show

Cause . 1

Summons . 5

Complaint and Verification and Exhibit A. 7-57

Affidavit of William Fox . 58

Affidavit of Louis Rosenbluh . 91

Affidavit of William H. Swanson . 98

Affidavit of James J. Lodge . Ill

Affidavit of Abraham Carlos . . . 117

Affidavit of Samuel P. Weissmann . 121

Affidavit of Gustavus A. Rogers . 124

Supreme Court of the State of New York,

NEW YORK COUNTY.

Greater New York Film Rental
Company,

Plaintiff,

against

Motion Picture Patents Com¬
pany, General Film Company,
American Mutoscopo & Bio-
graph Company, Edison Man¬
ufacturing Company, Essanay
Film Manufacturing Com¬
pany, Kalem Company, George
Kloine, Lubin Manufacturing
Company, Patlie Frercs, Selig
Polyscope Company, Vita-
graph Company of America,
and Melies Manufacturing
Company,

Defendants.

It appearing to my satisfaction, by the annexed
complaint, verified December 1G, 1911, and by the
annexed affidavits of William Fox, verified on the
same day, James J. Lodge, verified December 15,
I fill, William II. Swanson, Louis Rosenbluh, Ab-

(Injunction Order and Order to Show Cause.)

mlinm Carlos and Sanniol P. lYeissionmi eaoli
verified on tho same day, and Gustavus A. Rogers,
verified December 10, 1011, that the plaintiff prays
for and is entitled to judgment against the de¬
fendants, restraining the commission of the acts
hereinafter enjoined, and that the commission of
such acts during tho pendency of this action
would produce irreparable injury to tho plain¬
tiff, and render the judgment ineffectual; and
that the defendants, during the pendency of this
action, are doing and procuring and suffering to
be done, and threaten and are about to do and
procure and suffer to be done, the acts hereinaf¬
ter mentioned, in violation of tho plaintiff’s
rights respecting tho subject of tho action, and
tending to render tho judgment ineffectual, such
acts consisting of an attempted cancellation of
the plaintiff’s license and of intended and threat¬
ened discontinuance of the supply of motion pic¬
ture films to the plaintiff’, which it 1ms heretofore
received and is entitled to receive, and of inter¬
ference and threatened interference with the
plaintiff’s business and customers, tending to the
destruction of the plaintiff’s business; and that
the plaintiff is entitled to an injunction restrain¬
ing the cancellation of his license and the impair¬
ment or discontinuance of the aforesaid service
to the plaintiff, and all interference with its busi
ness and customers upon the grounds that
the plaintiff is entitled, both by virtue of
its license and tho other contracts sot forth
f , tlle „ complaint, and by virtue of the
facts alleged m the complaint and accom¬
panying affidavits, to receive from the defend¬
ants, pursuant to the duty resting upon them and
arising out of the facts sot forth, continued un¬

( Injunction Order and Order to Show Cause.)

impaired and efficient service, as heretofore, of
motion picture films; and that the defendants
threaten and are about to interfere with and cut
off tho plaintiff’s supply of such films, and other¬
wise to interfere with and destroy the plaintiff’s
business; and that tho plaintiff has no adequate
remedy at law, and is without other remedy than
tho injunction prayed for in the complaint; and
tho. plaintiff having given the security provided
bylaw;

Now, on motion of Rogers & Rogers, attorneys
for the plaintiff;

It is obdkhed, that the defendants, and each of
them, and their and each of their officers, direc¬
tors, attorneys, agents and servants, bo and they
hereby are enjoined and restrained, until tho fur¬
ther order of this Court, from interfering with
tho plaintiff’s business, or from discriminating
against it, or from ceasing to supply the plaintiff', .
without delay or discrimination, with motion pic¬
ture films produced by tho defendants designated
as licensed manufacturers, respectively, upon the
plaintiff’s orders, upon tho plaintiff’s paying for
such films and continuing to perform the condi¬
tions of its license, Exhibit A, and from in any
wise altering, to the plaintiff’s prejudice, in com¬
pleteness and promptness of . service, or other¬
wise, the methods of business heretofore and now
prevailing between the plaintiff and the defend¬
ants designated as licensed manufacturers; from
taking from tho plaintiff’s possession or that of
any customer or exhibitor, or in any wise inter¬
fering with, by means of actions of replevin, or
otherwise, any of tho film possessed by the plain¬
tiff; from interfering with the plaintiff’s busi-

( Injunction Order and Order to Show Cause.)

uoss oi' customers, and from attempting to alien¬
ate or entice said customers from the plaintiff;
and from cancelling or attempting to cancel the
plaintiff’s license, Exhibit A, or from in any wise
interfering with the plaintiff’s business, or from
requiring or inducing the defendants designated
as licensed manufacturers, or any of them, to
cut off, limit, or in any wise make less efiiciont than
heretofore, the supply of films 'by said licensed
manufacturers, respectively, to the plaintiff, or
from in any wise interfering with the business
relations hitherto and now existing between the
plaintiff and said licensed manutaetnrors.

The plaintiff is hereby given leave to servo
additional papers in support of its motion to
continue this injunction pendente tile, on or be¬
fore December 19, 1911.

Lot the defendants show cause at a Speciul
Term, Part I, of this Court, appointed to bo hold
at the New York County Court House in the
Borough of Manhattan, City of New York, on the
20 day of December, 1911, at the opening of
Court on that day, or as soon thereafter as coun¬
sel can be heard, why a rule or order should
not bo made continuing this injunction dur¬
ing the pendency of this action ; mid why the plain¬
tiff should not have such other, further or differ¬
ent relief as may seem good to the Court.

Let a copy of the summons and complaint hero¬
in and of the aforosuid affidavits, together with
» copy of this order, ho served upon the defend¬
ants not later than December 18, 1911; and such
service shall he sufficient.

December 16, 1911.

John Ford,

Justice Supreme Court.

SUPREME COURT OP THE STATE OP
NEW YORK,

NEW Y011K COUNTY.

Q iieateb New York Film Rental
Company,

Plaintiff',

against

Motion Picture Patents Com¬
pany, General Film Company,

American Mutoscope & Bio- *4

graph Company-, Edison Manu¬
facturing Company, Essanay Summons.

Film Manufacturing Com¬
pany, Kalem Company,

George Kleine, Ludin Manu¬
facturing Company, Patiie '

Freiies, Selio Polyscope Com¬
pany, Vitagrapii Company of
America and Melies Manu¬
facturing Company,

Defendants.

To the above-named Defendants:

You are hereby summoned to answer the com¬
plaint in this action, and to serve a copy of your
answer on the plaintiff’s attorneys within twenty-
days after the service of this summons, exclusive
of the day of service ; and in case of your failure
to appear or answer, judgment will be taken

(Summons.)

against you by default, for the relief demanded
in the complaint.

Trial desired in New York County.

Dated, New York, December 16, 1911.

Rogers & Rogers,

Attorneys for Plaintiff,

Office and Post Office Address :

No. 160 Broadway,
Borough of Manhattan,

New York City.

SUPREME COURT OF THE STATE OF
NEW YORK.

New York County.

Greater New York Film Rental
Company,

Plaintiff,

against

Motion Picture Patents Com¬
pany, General Film Company,
American Mutoscope & Bio-
graph Company, Edison Manu-
pacturinq Company, Essanay
Film Manufacturing Com¬
pany, Kalem Company’,
George Kleine, Lurin Manu¬
facturing Company', Patiie
Freres, Selig Polyscope Com¬
pany, Vitagraph Company of
America and Mislies Manu¬
facturing Company,

Defendants.

The plaintiff, by Rogers & Rogers, its attorneys,
complains of the defendants, and alleges as fol-

First: The plaintiff is, and since March, 1907,
has been, a domestic corporation, having its office
and principal place of business in the Borough of
Manhattan, City of New York, and engaged as a
rental agency in leasing to exhibitors in said City
of New York and elsewhere in the State of New

( Complaint ,)

York, and in the States of New Jersey, Con¬
necticut and Massachusetts, motion picture films
for use in projecting machines, togetkor with
such projecting machines and appliances, for'
the purpose of enabling exhibitors to give
motion picture exhibitions in the manner here¬
inafter more fully described. The term “rental
agency,” as herein used, moans nn individual,
partnership or corporation, which, since the or¬
ganisation of the defendant Motion Picturo Pat¬
ents Company in or about December, 1908, after
first obtaining a license from said Patents Com¬
pany, leases motion picturo films from certain
manufacturers (hereinafter referred to ns licensed
manufacturers) licensed by said Patents Com¬
pany and operating by virtue of such licenses
under the patents owned by said Patents Com¬
pany, and hereinafter more fully described, and
in turn sub-lets such films, together with project¬
ing machines and appliances purchased from vari¬
ous sources, such machines being first licensed
by said Pntents Company, to exhibitors who are
licensed by said Patents Company, for the pur¬
pose of enabling the exhibitors to give public ex¬
hibitions of motion pictures.

Second: Th0 defendant Motion Picture Pat¬
ents Company (hereinafter referred to as the
Patents Company) is, and since about December,
1JUS, lias been, a foreign corporation, organized
and existing under and pursuant to the laws of
the State of New Jersey, and having its office and
principal place of business in the Borough of
Manhattan, City of New York. It is the owner
ot all the patents hereinafter described for motion
picture films, cameras and parts thereof, and

( Complaint ,)

projecting machines and parts thereof, and is,
and -ever since its organization lias been, engaged
in licensing certain manufacturers to make such
films under said patents, and also to import films
from foreign countries, and in licensing other
manufacturers to construct projecting machines,
and in licensing film rental agencies, which by
means of such licenses are enabled to obtain films
from said licensed manufacturers.

(a) The defendant General Film Company is,
and since April 21, 1910, has been, a foreign cor¬
poration, organized and existing under and pur¬
suant to the laws of the State of Maine, and hav¬
ing its principal office and place of business, in the
Borough of Manhattan, City of New York. It ib,
and since its organization has been, engaged in
business as a rental ageney, holding a license ns
such agency from said Pntents Company, and
leasing motion picture films from the aforesaid
licensed manufacturers, and in turn leasing such
films, together with projecting machines and ap¬
pliances, to exhibitors in the State of New York
and elsewhere and throughout the United States
and Canada.

(b) The defendant American Mutoscope & Bio¬
graph Company is, and at all times hereinafter
mentioned was, a foreign '-corporation, organized
and existing under and pursuant to the laws of
the State of New Jersey, and having its office and
principal place of business in the Borough of Man¬
hattan, City of New York, and engaged as one
of the aforesaid licensed manufacturers, holding
a license from said Patents Company, in manu¬
facturing motion picture films, and in leasing

28 ( Complaint .)

the same to licensed rental agencies in the State
oi' New York and elsewhere and throughout -the
United States and Canada.

(c) The defendant Edison Manufacturing Com¬
pany is, and at all times hereinafter mentioned
has boon, a foreign corporation, organized and
existing under and pursuant to the laws of the
State of Now Jersey, and having an office and
carrying on business in the Borough of Manhat¬
tan, City of New York, and engaged, among other

29 things, as one of the aforesaid licensed manufac¬
turers, holding a license from said Patents Com¬
pany, in manufacturing and leasing motion pic¬
ture films to licensed rental agencies in tho State
of New York and elsewhere and throughout the
United States and Canada.

W The defendant Essanay Film Manufactur¬
ing Company is, and at all times hereinafter
mentioned has been, a foreign corporation, or¬
ganized and existing under and pursuant to the
laws of the State of Illinois, and engaged,
since December, 1908, as one of the afore-
3 said licensed manufacturers, holding a li¬
cense from said Patents Company, in manufac¬
turing and leasing motion picture films to licensed
rental agencies in the State of New York and
elsewhere and throughout the United 'States and
Canada.

(e) The defendant Kalem Company is, and at
all times hereinafter mentioned has been, a do- .
mestic corporation, engaged, since December,
1908, as one of the aforesaid licensed manufactur¬
ers, holding a license from said Patents Company,

(Complaint.) 31

in manufacturing and leasing motion picture films
to licensed rental agencies in tho State of New
York and elsewhere and throughout the United
Slates and Canada.

(/) Tho defendant George Kloine is, and since
December, 1908, has been, one of the licensed man¬
ufacturers aforesaid, holding a license from said
Patents Company, and engaged in importing and
leasing motion picture films to licensed rental
agencies in the State of New York and elsewhere
and throughout the United States and Canada. 32

(ff) The defendant Lubin Manufacturing Com¬
pany is, and at all times hereinafter mentioned
has been, a foreign corporation, organized and
existing under and pursuant to the laws of the
State of Pennsylvania, and engaged, since Decem¬
ber, 1908, as one of the aforesaid licensed manu¬
facturers, holding a license from said Patents
Company, in manufacturing and leasing motion
picture films to licensed rental agencies in the
State of Now York and elsewhere and throughout
the United States and Canada.

(h) The defendant Pathe Freres is, and at all
times hereinafter mentioned has been, a foreign
corporation, organized and existing under and
pursuant to the laws of the State of New Jersey,
having an office and carrying on business in the
Borough of Manhattan, City of Now York, and
engaged, since December, 1908, as one of the
aforesaid licensed manufacturers, holding a li¬
cense from said Patents Company, in manufac¬
turing and leasing motion picture films to -licensed
rental agencies in the State of New York and

34 ( Complaint .)

elsewhere and throughout the United States and
Canada.

(i) The defendant Selig Polyscope Company is,
and at all times hereinafter mentioned has been,
u foreign corporation, organized and existing un¬
der and pursuant to the laws of the State of Illi¬
nois, and engaged, since Decembor, 1908, as one
of the aforesaid licensed manufacturers, holding a
license from said Patents Company, in manufac¬
turing and leasing motion picture films to licensed

35 rental agencies in the State of New York and else¬
where and throughout the United States and
Canada.

U) The defendant Vitagraph Company of
America is, and at all times hereinafter mentioned
has been, a domestic corporation, and engaged,
since December, 1908, as one of the aforesaid li¬
censed manufacturers, holding a license from said
Patents Company, in manufacturing and leasing
motion picture films to licensed rental agencies in
the State of New York and elsewhere and through¬
out the United States and Canada.

(k) The defendant Melies Manufacturing Com¬
pany is, and since about July, 1910, has been, a
domestic corporation, and engaged as one of the
aforesaid licensed manufacturers holding a license
from said Patents Company, in manufacturing
and leasing motion picture films to licensed rental
agencies in the State of New York and elsewhere
throughout the United States and Canada.

(l) All of the aforesaid defendants, except Mo¬
tion Picture Patents Company and General Film

( Complaint .) ^ .

Company, are heroin collectively referred to as
the licensed manufacturers.

Tuimi: The business of manufacturing films
and; projecting machines for tile purpose of ex¬
hibiting motion pictures lias, during a period of
about ten years past, become one of great extent;
and importance in the United States and Canada
and in foreign countries, and during the pastfour
or five years has developed to vast proportions,
involving tlie investment of many millions of dol¬
lars. Every city and’ village and almost every 38-
hamlet in tlie land has moving picture shows,
which linvo proved a means of amusement, recrea¬
tion and education at small cost to grout numbers
of people. Such shows are constantly increasing
in popularity, and new theatres and other places
of entertainment, for the purpose of showing such
pictures, are constantly being established through¬
out the United States. Such exhibitions have
also proved of groat value for educational pur¬
poses, and are used in schools and colleges, and
the photographing of moving objects upon the
films hereinafter described has proved valuable in
■scientific research, and is being increasingly used 39
for such purposes.

Foturnr: Prior to December, 1908, when the
Patents Company was organized,, letters patent
of the United States, covering cameras, with which
moving, pictures wore taken, and the negative
films upon which the photographs wore made, and
the positive films to which tho pictures wore trans¬
ferred, and the projecting machines by means of
which the pictures upon the films wore magnified
and thrown upon screens, and relating generally

u \

40 (Complaint.) *

to improvements in tilts motion picture urt, wore J

owned and controlled by tliree of tlie defendants $

hereinbefore described as licensed manufacturers |

to wit : The Edison Manufacturing Company, the |

American Mutoscope and Biogrnph Company, and 1

the Vitagraph Company of America, and by tlie J

Armat Moving Picture Machine Company. Said 1

owners, and other of the licensed manufacturers d

operating under licenses, manufactured and sold !j

apparatus and films covered by said patents, and j

still other of the defendant manufacturers disre- |

41 garded and denied the validity of said patents J

and carried on business despite them. \

(a) The patents so owned and controlled by I

said defendants and said Armat Company were I

the following:

No. 578185, dated March 2, 1807, for Vitnscopo, !

granted to Thomas Armat; ;

No. 580749, dated April 13, 1807, for Vitascope, |

granted to Thomas Armat;

No. 58G053, dated July 20, 1897, for Phan- ;

toscopo, granted to Charles F. Jenkins and

42 Thomas Armat;

No.- 58801(5, dated August 24, 1897, for Nine- i

toseopo granted to Charles M. Campbell, as as- I

signee of Willard G. Steward and Ellis F. Frost; |

No. G73320, dated April 30, 1901, for Kino-
toscoiio, granted to the American Vitagraph. Com- I

pany, ns assignee of Albert E. Smith ; I;

No. 673992, dated May 14, 1901, for Vitascope, I

granted to Thomas Armat ;

No. 707934, dated August 2G, 1902, for Project- 1

ing ICinetoscope, granted to E. & H. T. Anthony l|

& Co., as assignees of AVoodville Latham ; |

( Complaint .) ^

No. 722382, dated March 10, 1903, for Animated
Picture Apparatus, granted to American Mutos¬
cope & Biograph Co., as assignee of John A.
Pross ;

No. 744251, .dated November 17, 1903, for Kino-
loscopo, granted to Albert E. Smith ;

No. 770937J dated September 27, 1904, for Kine-
toscopo, granted to the Vitagraph Company of
America, ns assignee of Albert E. Smith;

No. 771280, dated October 4, 1904, for Winding
Reel, granted to Albert E. Smith ;

No. 785205, dated March 21, 1905, for Flame- 44
Shield for Kinetoseopo, granted to the Vitagraph
Company of America, as assignee of William Ell-
wood ;

No. 785237, dated March 21, .1905, for Film-
Holder for Kinetoscope, granted to the Vitagraph
Company of America, as assignee of Albert E.
Smith ;

Reissued letters patent Nos. 12037 and 12038,
dated September 30, 1902, issued to Thomas A.
Edison, in place of original letters patent No.
5891G8, dated August 31, 1897, issued to said
Thomas A. Edison, for a new and useful improve¬
ment in Kinetoscopic cameras; 45

Reissued letters patent No. 12192, dated Jan¬
uary 12, 1904, issued to Thomas A. Edison, in
place of original letters patent No. 589168, dated
August 31, 1897, issued to said Thomas A. Edison,
for Kinetoscopic film.

(5) Each of the aforesaid patents was granted
for the term of seventeen years from the date of
issue of the original patent; and the plaintiff al¬
leges, upon information and belief, that said pat¬
ents collectivoly embraced the entire art of photo-

46 ( Complaint .)

' graphing moving objects, tile cameras with which
such photographs were lukcn, the films upon
which photographs wore made, and those to which
they wore transferred, and the projecting ma¬
chines and appliances by means of which the pic¬
tures were shown.

Firm : Prior to the organization of the Patents.
Company in December, 1908, the defendants here¬
in designated as licensed manufacturers carried
on their business independently, each competing
47 with all of the others in the manufacture and sale
of their aforesaid products, and there was actual
and active competition throughout the United
States among all of said defendants. During suid.
period of competition, said defendants sold their
products, and particularly their films, outright to
concerns like the rental agencies hereinbefore de¬
scribed, which in turn leasod the apparatus and
films purchased by them to exhibitors throughout
the United States and Canada. Said defendants
designated as licensed manufacturers, also, during
said period of competition, imported from foreign
48 countries largo quantities of film there manufac¬
tured, and sold the same to such rental agencies
for distribution by lease to exhibitors throughout
the United States. Said rental agencies purchas¬
ed outright, and became the absolute owners of,
the film sold to them by said defendants desig¬
nated as licensed manufacturers.

(a) The apparatus and films were manufactur¬
ed and sold by the manufacturers in various
states, to wit: New York, Pennsylvania, Illinois,
and other states, and such films wore also import¬
ed into the United States from foreign countries;

(Complaint.) 4,

and all such films, domestic and foreign, were sold
in and transported to all the States and Territories
of the United States, and into the Dominion of
Canada; and the sale and transportation thereof
constituted interstate and foreign commerce.

( b ) The rental agencies leased such apparatus
and films to exhibitors in all the States and Terri¬
tories and in Canada; and such leasing and the
transportation of such apparatus and films con¬
stituted interstate and foreign commerce.

(c) During said period of competition, a large
number of sucli rental agencies, as aforesaid (ex¬
cept that they were free and independent and
not licensed or subject to control), was es¬
tablished throughout the United States, carry¬
ing on business ns hereinbefore described ; and, in
the Borough of Manhattan, City of Now York,
down to the spring of 1909, when the defendant
Patents Company was in active operation, there,
were upwards of twenty such rental agencies ac¬
tively competing with one another for the busi¬
ness of leasing apparatus and films to exhibitors

in the City of New York and vicinity, and else- 5 1
where in the State of New York and in the United
States.

(d) The result of the aforesaid competition
among the defendants designated as licensed
manufacturers was to improve the product of the
manufacturers and to keep down the cost thereof
to the rental agencies; and the effect of the com
petition among the rental agencies was to im¬
prove the service given and keep down the cost
to the exhibitors.

52 ( Complaint .)

Sixth : In December, 1908, the defendant Pat¬
ents Company was organized, ns aforesaid, for
the purpose of stifling and suppressing tile exist¬
ing competition among the manufacturers heroin
designated ns licensed manufacturers, and to
combine said licensed manufacturers into or sub¬
ject them to the control of a single corporation,
which should acquire the ownership of all of tho
aforesaid letters patent; and with the ultimate ob¬
ject of extinguishing, also, competition among the
aforesaid rental agencies throughout the United

53 States, and driving said rental agencies out of
business, and bringing the entire business of fur¬
nishing apparatus and films to exhibitors within
the grasp of said Patents Company and those in¬
terested therein and who had brought about its
organization.

Sbvbntii : Immediately after tho organization
of tho Patents Company, all of the aforesaid let¬
ters patent were assigned to it by the respective
owners thereof, and said Patents Company tlierc-

( Complaint .)

tare and sale of the aforesaid apparatus and films
and in intrastate and interstate and foreign trade
aud commerce therein, and, pursuant to tho
agreement then aud there made, of some of the
details of which tho plaintiff is not informed, all
of the aforesaid letters patent were assigned ami
transferred to said Patents Company, and each
of said licensed manufacturers entered into a li¬
cense agreement with said Patents Company, by
which each of said licensed manufacturers cove¬
nanted and agreed only to lease, and not to sell,
in the United States or its territories or posses- 56
sions (except its insular possessions and Alaska),
motion picture films manufactured or imported by
said licensed manufacturers, respectively, of a
width greater than approximately one inch, and
under the condition and restriction that said
films should bo used only on exhibiting and pro¬
jecting machines licensed by said Patents Com¬
pany under letters patent owned by it.

(b) The motion picture films theretofore aud
since manuf 1 11 cd I sa 1 I eti se 1 manufactur¬
ers, and used for exhibition purposes, were and
are of a width greater than approximately one 57

(c) In and by said license agreement, said Pat¬
ents Company granted to each of said licensed
manufacturers the right and license, for the
United States, its territories and possessions,
to manufacture and sell motion picture exhibiting
or projecting machines, embodying one or more of.
the inventions described and claimed in certain of
the letters patent hereinbefore mentioned; and
said Patents Company released each licensee from

( Complaint .)

liability i'or profits and damages by reason of
prior infringement.

(il) In and by said license agreement, the li¬
censee admitted the validity of the letters patent
described therein, to wit: Numbers 578185,
580749, 58G953, 588910, 073329, 073992, 707934,
722382, 744251, 770937, 771280, 785205, and
785237; the validity of some or all of which had
theretofore been questioned and had been in liti¬
gation among the respective owners of said let-

59 tors patent and between some or all of such own¬
ers and other of the defendants heroin desig¬
nated ns licensed manufacturers.

(e) In and by said license agreement, each
licensee covenanted and agreed, that on all mo¬
tion picture exhibiting or projecting machines
containing one or more of the inventions de¬
scribed and claimed in letters patent numbers
073329, 744251, 770937, 771280, 785205, and
785237, made in the United States, its territories
and possessions, by the licensee, and sold during

60 the operation of the license, the licensee would
pay certain fixed royalties; and that every mo¬
tion picture exhibiting or projecting machine
capable of exhibiting or projecting, by trans¬
mitted light, motion pictures on a film of approxi¬
mately greater width than one inch, and embody¬
ing one or more of the inventions described and
claimed in letters patent numbers 578185, 580749
580953, 588910, 073329, 073992, 707934 700380’
744251, 770397, 771280, 785205, and 785237, made
m the United States, its territories or possessions,
by the licensee, should he sold by the licensee,
except when sold for export, under the restrie-

21.

{Complaint.) 61

tion and condition that such exhibiting or pro¬
jecting machines should bo used solely i'or ex¬
hibiting or projecting motion pictures containing
the inventions of reissued lottors patent number
12192, leased by a licensee of the Patents Company
and upon other terms to bo fixed by said Putonts
Company and complied with by the user, which
other terms should bo only the payment of a roy¬
alty or rental to the Patents Company while in
use. It was further covenanted, that each licensee
would attach in a conspicuous place, to each ex- ■
hibiting or projecting machine of the licensee’s 62
manufacture, sold by it, except for export, a plate
showing plainly not only the dates of the letters
patent under which the machine was licensed, but
also the following words and figures:

“Serial No.

Patented. No.

“The sale and purchase of this machine
gives only the right to use it solely with mov¬
ing pictures containing the invention of re- "
issued patent No. 12192, leased by a licensee
of the Motion Picture Patents Company, the 6,
owner of the above patents and reissued pat- 3
ont, while it owns said patents, and upon
other terms to be fixed by the Motion Picture
Patents Company and to be complied with by
the user while it is in use and while the Mo¬
tion Picture Patents Company owns said
patents. The removal or defacement of this
plate terminates the right to use this ma¬
chine.”

( f ) In and by said license agreement, each li¬
censee further covenanted that every motion pic¬
ture exhibiting or projecting machine not capable

( Complaint .)

of exhibiting or projecting, by transmitted light,
motion pictures on a film of a width greater than
approximately one inch, or capable of exhibiting
or projecting motion pictures on film of any width,
but only with reflected light, and embodying one
or more of the inventions described and claimed
in letters patent numbers 578185, 580749, 58G953,
588910, 073329, 073992, 707934, 722382, 744251,
770937, 771280, 785205, and 785237, and made in
the United States, its territories and possessions,
by the licensee, should bo sold by the licensee,

65 except when sold for export, under the restric¬
tion and condition that said machine should be
used in exhibiting or projecting motion pictures
only in places to which no admission fee should
be charged; and that the licensee would attach
in a conspicuous place to every such machine a
plate showing not only the dates of the letters
patent under which suid machine was licensed,
but also the following words and figures:

“Patented. No.

“The sale and purchase of this machine

66 gives only the right to use it so long us this
plate is not removed or defaced and in places
to which no admission foe is charged.”

(g) In and by said license agreement, each li¬
censee further covenanted not to make or sell
repair parts for motion picture exhibiting or pro¬
jecting machines manufactured or imported and
sold by any other person, firm or corporation li¬
censed by the Patents Company to manufacture
or import and sell such machines under all or any
of the United States letters patent herein last
above mentioned by numbers; and further covc-

( Complaint .)

minted not to sell any exhibiting or projecting
machine at loss than the licensee’s list price, ex¬
cept to jobbers and other persons, firms or cor¬
porations for the purpose of resale, aiid that the
licensee would require such jobbers and other
persons, firms and corporations to sell such ma¬
chines at not less than the licensee’s list price,
except a discount of two per cent, for payment in
ton days; and further covenanted not to sell, nftcr
May 1, 1909, any exhibiting or projecting machine
capable of exhibiting or projecting by transmitted
light motion pictures on a film of a width greater 68
than approximately one inch, at a loss list price
than one hundred and fifty dollars ($150), which
might include various designated attachments,
and that complete machines might bo sold between
February 1, 1909, and May 1, 1909, at a less list
price than one hundred and fifty dollars ($150),
but only to persons, firms or corporations not en¬
gaged in the business of renting motion picture
films, and not for use in any permanent or fixed
place of exhibition. 1

(h) In and by said license agreement, it was
further agreed, that the Patents Company might 69
grant other licenses to manufacture or import
and sell exhibiting or projecting machines under
any or all of the United States letters patent
herein last above mentioned by numbers, said,
licenses to be in writing, and not to be granted or
continued under terms, conditions or stipulations
in any respect more favorable to such licensees
than those set forth in said license agreement,
except three named concerns,, including the defend¬
ant Edison Manufacturing Company and said
Ai-mat Company, none of which should pay

j0 ( Complaint .)

any royalties on machines embodying any
or all of the inventions described and claimed
in letters patent numbers 578185, 580719, 586953,
588916, 673992, 707931, and 722382, when such
machines should be sold bona fide for export, un¬
less such machines should also embody one or
more of the inventions described and claimed in
letters patent numbers 673329, 711251, 770937,
771280, 785205, and 785237, in which case a fixed
royalty for each such machine should be paid.

•pi (i) In and by said license agreement, it was
further mutually agreed, between tho Patents
Company and each licensee, that tho license agree¬
ment should take effect on February 1, 1909, and
continue until June 20, 1910, with the option to
the licensee to renew the agreement and license
thereafter from year to year upon the same terms,
conditions and stipulations, by giving notico to
the licensor on or before March 20th in each year,
beginning witji tho year 1910, and that thereupon
tho license should bo deemed renewed for tho
period of one year, beginning Juno 20th of the
year following such notice, and that such notico

72 might be given by the licensee during the life or
lives of each or all of the patents under which
the licensee was by said agreement licensed.

(j) In and by said license agreement, it was
further mutually agreed, that the agreement
might be terminated during the original term, or
any renewal period, if either party should know¬
ingly or through gross neglect or carelessness be
guilty of bread), violation or non-performauce
of its covenants, conditions and stipulations, re¬
sulting in substantial injury to the other party,

( Complaint .)

and should, for the period of forty days after
notice thereof from tho other party, persist there¬
in or fail to repair the same. Reparation, how¬
ever, within such period of forty days should not
prevent termination of tho agreement if thereafter
the guilty party should knowingly or through
gross neglect or carelessness be guilty of a second
breach, resulting in substantial injury to the other
party.

Eighth : The plaintiff further alleges, upon
information and belief, that each of said licensed
agreements has been renewed, pursuant to the
provisions thereof, from year to year, and is still
in full force and effect, and that tho intention
of tho Patents Company and said licensed manu¬
facturers is to continue said license agreements
in force and effect during tho life of the patent
owned by said Patents Company which is latest
to expire.

(a) Soon after this combination of licensed
manufacturers with said Patents Company was
formed, competition among said licensed manu¬
facturers ceased and they very substantially in¬
creased the prices theretofore prevailing for the
films made by them and have ever since main¬
tained such increased prices, and now intend a
further increase.

Ninth: Shortly after the organization of the
Patents Company, and in January, 1909, and
after the aforesaid combination between the
Patents Company and the licensed manufactur¬
ers had been effected, and the aforesaid patents
transferred to the Patents Company, and the

76 ( Complaint .)

aforesaid license agreements between tile Patents
"ompany and said licensed manufacturers bad
boon entered into, a meeting was called at tbe
Borough of Manhattan, City of New York,
by the Patents Company, and the afore¬
said licensed manufacturers, to which repre¬
sentatives of all the principal rental agencies
throughout the United States, about 120 in num¬
ber, including the plaintiff, were invited. A largo
number of such representatives, including a rep¬
resentative of the plaintiff, attended said ineet-

77 ing, and were then and there informed in outline
of the arrangements that had been effected be¬
tween the Patents Company and the licensed
manufacturers, and of the intention of said Pat¬
ents Company and licensed manufacturers to re¬
duce the number of rental agencies in the United
States, and to require all such rental agencies as
might be permitted to continue business to accept
licenses from said Patents Company, grunting
such rental agencies the privilege of leasing, but
not purchasing, films from the licensed manufac¬
turers, and no others, and in turn of leasing such
films and licensed machines and apparatus to such

7 exhibitors throughout the United States and Can¬
ada as should be licensed by said Patents Com¬
pany, and as would agree not to use any other mo¬
tion picture films than those manufactured by the
licensed manufacturers under the license of the
Patents Company, or any other exhibiting or pro¬
jecting machines or apparatus than those licensed
by the Patents Company, and would pay a license
fee to said Patents Company on each machine.
Further requirements on the part of the exhibi¬
tors, as hereinafter stated, were required to be
exacted by the rental agencies.

( Complaint .)

(a) The representatives of said rental agencies
protested against the scheme ns unjust and op¬
pressive; but the representatives of the Patents
Company and of the licensed manufacturers in¬
sisted that the rental agencies must choose be¬
tween accepting licenses from the Patents Com¬
pany and operating under the restrictions there,
by imposed, or retiring from the motion picture
business altogether. Thereupon, after much dis¬
cussion, the rental agencies, being helpless and
unable to obtain satisfactory films or apparatus,
except by the means dictated by the Patents Com¬
pany and the licensed manufacturers, reluctantly
acquiesced, and a considerable number of such
rental agencies throughout tho United States, in- '
eluding the plaintiff, accepted license agreements,
identical in terms, from the Patents Company.

(b) Tho number of rental agencies in the Bor¬
ough of Manhattan, City of New York, was ar¬
bitrarily reduced by tho Patents Company and
tho licensed manufacturers from upwards of
twonty to nine, the Patents Company, with the
concurrence of the licensed manufacturers, refus¬
ing to license more than nine agencies in said
Borough of Manhattan; and the Patents Company
and the licensed manufacturers largely reduced
Urn number of rental agencies throughout the
United States, by refusing to license a number of
such rental agencies with which tho licensed man¬
ufacturers had theretofore dealt for a number of
years. The number of agencies in the United
States was reduced from about one hundred and
twenty to about seventy-five.

Tenth: Thereupon, on January 20, 1909, an
agreement, known as an “Exchange License

( Complaint .)

Agreement,” was entered into between the plain¬
tiff and the defendant Patents Company. A copy
of said agreement, marked Exhibit A, is hereto
annexed and made part of this complaint. At andV
before the time of the execution of said Exhibit;

A, it was mutually understood and agreed, bc-V
tween the plaintiff and the defendant Patents' ;
Company, that said license agreement, Exhibit1 i
A, should continue during the unexpired term of
reissued letters patent number 12192, unless
sooner terminated for causo, pursuant to the
provisions of Paragraph 19 of said agreement.

(a) The plaintiff entered into said license
agreement under compulsion, because it could not
otherwise obtain licensed machines or licensed
film, both of which wore essential to its business.

The plaintiff further alleges, upon information
and belief, that while certain unlicensed manufac¬
turers wore and are engaged in producing both
machines and film, most or all of such machines
have failed to comply with the requirements of the
New York Board of Underwriters and of the De¬
partment of Water Supply, Gas and Electricity of
the City of New York, and therefore cannot
legally be used in public exhibitions in the City of
Now York, The films produced by such unli¬
censed manufacturers were, and still are, inferior,
both in range of subjects and in perfection of the
scenes photographed, to the films produced by the
aforesaid licensed manufacturers; the unlicensed
films have not. until recently, been produced in
quantities sufficient for the plaintiff’s business; : jl
and there has been, and still is, litigation in the if

Circuit Courts of the United States between the -If

Patents Company, as complainant, and the un- |j

( Complaint .) 85

licensed manufacturers of machines and films,
ns defendants, in which it has boon and is con¬
tended by the complainant that the machines
and films produced by said unlicensed manufac¬
turers infringe some or all of the aforesaid pat¬
ents now owned by the Patents Company, and it
never has been, since December, 1908, null is not
now, safe or commercially practicable for the
plaintiff or other rental agencies, to use either the
machines or the films produced by said unlicensed
manufacturers, not only because such use would
involve tho users in litigation, but because, if the 86
claims of the Patents Company should be sus¬
tained, the supply of unlicensed machines and
films would bo cut off.

( b ) In addition, the films produced by the un¬
licensed manufacturers have acquired no such
degree of popularity as those produced by
the licensed manufacturers, who, owing to the
greater length of time during which they have
carried on tho business, have perfected their
organization and methods of production to a de¬
gree not vet reached by the unlicensed manufac¬
turers. The substitution of films produced by §7
independent manufacturers would greatly preju¬
dice the plaintiff’s business and largely reduce its
profits. The plaintiff has extensively advertised
the superiority of the films produced by the licens¬
ed manufacturers over the unlicensed films, and
has educated a large clientele patronizing a num¬
ber of theatres in tho City of New York and else¬
where in the State of New York and in other
States, which are supplied with film by the plain¬
tiff, to the superiority of said licensed films, and
the failure of tho plaintiff to furnish such licensed

(Complaint.)

films and any attempt to deal in unlicensed films
would result in practically the complete loss of the
patronage of its present customers.

Eleventh : Tile plaintiff, ever since its organ¬
ization, has carried on the business of a renlul
agency, and has supplied machines and film to a
largo number of licensed exhibitors in the City of
New York, elsewhere in the State of New York,
and in the States of New Jersey, Connecticut and
Massachusetts. The plaintiff supplies films to
89 ten of the largest, best equipped and best patron¬
ized motion picture theatres in the City of Now
York, and which exhibit motion pictures to three
hundred and fifty thousand (350,000) people in
every week; and, in addition, to about ninety (90)
other motion picture theatres in the City of New
York, as well as to similar exhibitors in various
places in the other States mentioned.

(a) The plaintiff has a largo investment in its
plant and property, and has established a valu¬
able good-will, all of which will bo rendered worth¬
less, if, by the threatened action of the defendants,
9° the plaintiff should be unable lo continue its busi¬
ness and supply licensed films as heretofore.

Twelfth: One of the conditions of the plain-
I tiff’s aforesaid license agreement, Exhibit A, is

I that prescribed by Paragraph 9, to the effect that

I the plaintiff should, without receiving any pny-
I meat therefor, return to each licensed manufac-
( hirer or importer, on the first day of every month,
commencing seven months after February 1, 1909,

( Complaint .)

the equivalent amount of positive motion picture
film in running feet (not purchased or leased over
twelve months before), and of the make of such
licensed manufacturer or importer, equal to the
amount of licensed motion pictures that was so
leased during the seventh month preceding the
day of each such return; and, pursuant to said
requirement, the plaintiff has from time to time,
since September, 1909, without receiving any com¬
pensation, returned large quantities of positive
motion picture film to the defendants herein
designated as licensed manufacturers, which the
plaintiff had purchased and owned outright, of
an actual value of upwards of one hundred thou¬
sand dollars ($100,000), and the purchase price
of which was upwards of three hundred thousand
dollars ($300,000).

Thirteenth : The plaintiff has duly performed
all the conditions of the aforesaid license agree¬
ment, Exhibit A, on its part to be performed.

Fourteenth : The Patents Company, in addi¬
tion to the royalties paid by the licensed manufac¬
turers, as hereinbefore set forth, has received from 93
or through each licensed rental agency, pursuant
to the provisions of paragraph 12 of said license
agreement, Exhibit A, a license fee of two dollars
per week for each licensed projecting machine
used by each licensed exhibitor. The plaintiff has
paid to said Patents Company during the exis¬
tence of the agreement, Exhibit A, upwards of
Thirty thousand dollars ($30,000) for such license
foes required to be paid by exhibitors. In prac¬
tice such exhibitors usually refused to pay such
license fees, and plaintiff was compelled to pay ■

(Complaint.)

the same. The plaintiff further alleges, upon in¬
formation and belief, that since January, 1909,
said Patents Company has received in license
fees paid by virtue of similar provisions, under
license agreements like Exhibit A, upwards of
One million dollars ($1,000,000).

Fifteenth: The plaintiff further alleges, upon
information and belief, that at or about the same
time when the aforesaid license agreements wore
made between the Patents Company and the li-
95 censed manufacturers, a separate agreement was
made and entered into between said Patents Com¬
pany and said licensed manufacturers, by which
for divers valuable considerations said licensed
manufacturers undertook and agreed to and with
said Patents Company that they, the said licensed
manufacturers, would supply to all rental agen¬
cies licensed by said Patents Company, all films
manufactured by said licensed manufacturers re¬
spectively, on payment by such licensed rental
agencies of the prices fixed by said licensed man¬
ufacturers. The plaintiff further alleges, upon
information and belief, that the said last-mon-
9 tinned agreement over since has boon and still
is in full force and effect and was made by the
parties thereto for the benefit of such rental agen¬
cies, including the plaintiff, as might be licensed
by said Patents Company, and to assure to said
licensed rental agencies a source of supply of the
aforesaid films, without which it would' bo impos¬
sible for such rental agencies to carry on business.

(a) The plaintiff further alleges, upon informa¬
tion and belief, that at or about the same time as
said last-mentioned agreement was made between

(Complaint.)

said Patents Company and said licensed manufac¬
turers, said Patents Company licensed cortain
manufacturers of projecting machines to manu¬
facture the same and sell them to licensed
rental agencies and licensed exhibitors, and
entered into an agreement with said manu¬
facturers, so licensed, of such projecting
machines, whereby the latter undertook and
agreed to and with said Patents Company, for the
benefit of rental agencies and exhibitors licensed
by said Patents Company, to furnish projecting
machines to such licensed rental agencies and 98
licensed exhibitors on payment of the price exact¬
ed by said manufacturers for said machines.

(l>) The manufacturers of projecting machines
licensed by said Patents Company were limited to
thirteen in number, although there were n number
of other manufacturers of such machines, and each
of the manufacturers so licensed agreed to pay a
royalty to said Patents Company upon each ma¬
chine manufactured and sold. The effect of such
agreement with said manufacturers of projecting
machines was to limit the source of supply of said
machines and to aid the Patents Company in 99
effectuating a monopoly of the motion picture
business in all its branches. In fact, only five of
the thirteen manufacturers so licensed ore manu¬
facturing or selling such machines.

Sixteenth: The plaintiff ever since the execu¬
tion of the license agreement, Exhibit A, has
leased films from the defendants herein designated
as licensed manufacturers, and all of the plain¬
tiff’s orders have hitherto been promptly executed
and it has received in each week since January 20,

( Complaint .)

1909, from eighteen to thirty-six reels of film con¬
taining photographs of new scones or subjects,
that quantity being the maximum output of the
combined licensed manufacturers, and tho plain¬
tiff in turn has leased such film to various licensed
exhibitors as hereinbefore mentioned.

Seventeenth: Tho Patents Company in the
early part of 1909 licensed nine rental agencies
in tho Borough of Manhattan, City of Now York,
under license agreements in all respects similar
to tho aforesaid agreement, Exhibit A, made with
tho plaintiff. Thereafter tho defendant General
Film Company was organized on or about April
21, 1910, for tho purpose of carrying on tho busi¬
ness of a rental agency; and tho plaintiff alleges,
upon information and belief, that said company
was organized and is controlled by said Patents
Company and said licensed manufacturers, and
that said General Film Company and said Patents
Company and said licensed manufacturers have
common officers and directors, to wit:

Frank L. Dyer, President of Edison Manufac¬
turing Company; President of tho Patents Com¬
pany; Director of the General Film Company;

H. N. Marvin, President of American Muto-
scope and Biograph Company; Vice-President of
the Patents Company;

J. J. Kennedy, Vice-President of American
Mutoscope and Biogrnpli Company; Treasurer of
the Patents Company; President of the General
Film' Company;

I ( Complaint .) I0-

j William Pelzer, Manager of a branch of the
| Edison Manufacturing Company; Secretary of
| tho Patents Company ;

| J. A. Burst, a Director of Pnthe Froros; Troas-
,3 urer of tho General Film Company;

' Albert E. Smith, Treasurer of Vilagraph Com-
| puny of America; Director of the General Film
Company.

3; Tho Board of Directors of said General Film ioq
% Company is composed of the following: Frank
L. Dyer, George K. Spoor, Samuel Long, George
Jf Kleino, Siognnmd Lubin, J. A. Berst, W. N. Selig,
Albert E.. Smith and J. J. Kennedy ; of whom, in
jf addition to those already mentioned, said Spoor
| is an officer and director of the defendant Essanay
| Film Manufacturing Company, one of the licensed
!| manufacturers; said Long is an officer and di¬
ll rector of tho defendant Kalem Company, one
$ of the licensed manufacturers; said Kleine
| is a licensed manufacturer; said Lubin is Presi-
I dent and a director of tho defendant Lubin Manu¬
facturing Company, one of the licensed manufac- I05
turers ; and said Selig is President and a director
of tho defendant Selig Polyscope Company, one
of the licensed manufacturers.

(a) The plaintiff further alleges, upon informa¬
tion and belief, that the said General Film Com¬
pany was organized as a part of and in further¬
ance of the combination and conspiracy to obtain
control of and to monopolize all branches of the
motion picture business and to restrain trade and
commerce therein among the several States and

(Complaint.)

with foreign nations ; and tlmt in furtherance of
said object the licenses of two of the aforesaid
nine licensed rental agencies formerly existing in
the Borough of Manhattan, City of Now York,
wore arbitrarily cancelled by said Patents Com¬
pilin' and the business thereof transferred to said
General Film Company, and of the remaining
seven rental agencies the business and good will
of six wore purchased by' said General Film Com¬
pany, the owners of said rental ngencies being
coerced into making such sales by the arbitrary
cancellation or threats of arbitrary cancellation
of their licenses by the Patents Company, and
said General Film Company has continued and
carried on the business of said purchased rental
agencies.

(h) The plaintiff further alleges, upon informa¬
tion and belief, that prior to November 14, 1911,
in furtherance of the aforesaid combination and
conspiracy to obtain control of the motion picture
business and to vest the control of the leasing nnd
subleasing of films in United States in said
General Film Company, said Patents Company
arbitrarily cancelled the licenses of a number of
licensed rental agencies doing business in various
parts of the United States, and by means of
threats of such arbitrary cancellation compelled
the sale of the business and good will of the re¬
maining licensed rental agencies, except the plain¬
tiff, to said General Film Company, which suc¬
ceeded to and acquired and has ever since car¬
ried on the business of all of said licensed rental
agencies so forced out of existence.

(Complaint.)

and the plaintiff further alleges, upon informa¬
tion and belief, that said General Film Company
supplies film for upwards of five hundred (500)
motion picture theatres in the City of New York,
which were formerly supplied by the aforesaid
nine licensed agencies.

Eighteenth : Several months prior to Novem¬
ber 14, 1911, the defendants Patents Company
and General Film Company urged the plaintiff to
sell to said General Film Company its business
and good will nnd offered to pay One hundred
thousand dollars ($100,000) therefor, provided
the plaintiff would surrender its aforesaid license
agreement, Exhibit A, which offer the plaintiff
refused.

(a) On November 14, 1911 the defendant Pat¬
ents Company served upon the plaintiff a notice
of which the following is a copy :

“Motion Picture Patents Company,

80 Fifth Avenue, New York.

November 14th, 1911.

Greater New York Film Rental Company,
116 East 14th Street,

New York City.

Pursuant to the right reserved by this
Company under the first clause of Section
Nineteen of the Conditions of License form¬
ing a part of the Exchange License Agree¬
ment existing between you nnd this 'Com¬
pany, and bearing date of the twentieth day
of January, Nineteen hundred and nine, we

( Complaint .)

hereby notify of our intention to terminate
said licenso nnd Hint the same will terminate
nt eight o’clock A. M. on Monday the fourth
day of December, Nineteen hundred and
eleven, unless sooner terminated by this
Company for any broach of the conditions of
said license.

Yours truly,

Motion Piotuhk Patknts Company,

By II. N. Maiivin

Vice-President.”

(b) Thereafter a conference was had between
the President of tbe' plaint i IT and the aforesaid
.T. A. Borst, a director of the defendant Pa the
Frores, and Treasurer of said General Film
Company. Said Borst informed the President of
the plaintiff that the reason for the aforesaid
notice of cancellation was that the Patents Com¬
pany and the licenod manufacturers and the Gen¬
eral Film Company had determined to increase
the price to be charged by said licensed manu¬
facturers for film, and that so long as the plain¬
tiff held its license such price could not be increas¬
ed and said licensed manufacturers could not ob¬
tain complete control of the motion picture busi¬
ness, which they desired to obtain. Said Borst fin¬
ally undertook, if the plaintiff would surrender its
license without opposition, to attempt to influence
his associates in the Patents Company and the
General Film Company to make an offer to the
plaintiff for the purchase of its business and good
will.

(c) Shortly thereafter at a conference between
tbe plaintiff’s President and tbe aforesaid J. J.
Kennedy, Treasurer of the Patents Company and

( Complaint ,)

President of said General Film Company, said
Kennedy, acting, the plaintiff alleges, upon infor¬
mation and belief, in behalf of both of said com¬
panies and of said licensed manufacturers, after
first insisting that the plaintiff hud nothing to sell,
inasmuch as its license had boon cancelled, fin¬
ally offered to reinstate said license and to pay
the plaintiff Ninety thousand dollars ($90,000)
for its business nnd good will, provided the same
should bo transferred to the General Film Com¬
pany together with the lease of the premises oc¬
cupied by tbe plaintiff at 11G East 14th Street in
the Borough of Manhattan, City of New York, on
or before eight A.M. on December 11, 1911. The
plaintiff’s President suggested that such papers
as wore desired by Mr. Kennedy to be executed
by the plaintiff, bo prepared and sent to the plain¬
tiff for examination by its counsel, nnd thereupon
said Kennedy telephoned to tbe aforesaid II. N.
Marvin and directed him to send to tbe plaintiff
a notice of withdrawal of the notice of cancella¬
tion of November 14, 1911.

(d) Thereafter, on or about December 2, 1911,
the plaintiff received from said Patents Company
a notice of which the following is a copy :

“Motion Ptctuiie Patents Company
80 Fifth Avenue, Now York.

December 1st, 1911.

Gkeateh New Yoiik Film Bental Company,
110 East 14th Street,

New York City.

Gentlemen:

Referring to our letter of November 14th,
notifying you of our intention to terminate

( Complaint .)

your license on the fourth day of December,
Nineteen hundred and eleven, wo hereby no¬
tify you tlmt said notice of termination is
hereby withdrawn.

Tours truly,

MoTrON PlCTUKE PATENTS COMPANY,

By H. N. Marvin Vico Pres.”

(c) Thereafter on or about December 7, 1911,
the plaintiff notified said Kennedy that it would
not sell its business or surrender its license, and
immediately thereafter the plaintiff received from
said Patents Company a notice of which the fol¬
lowing is a copy :

“Motion Pictuue Patents Company,

80 Fifth Avenue, Now York.

December 7th, 1011.

Cheater New York Film Dental Company,
110 East 14th Street,

New York City, N. Y.

Gentlemen :

Pursuant to the right reserved by this Com¬
pany under the first clause of Section Nine¬
teen of the Conditions of License forming
part of the Exchange License Agreement
existing between you and this Company and
hearing date the eighteenth day of January,
Nineteen hundred and nine, avc hereby notify
you of our intention to terminate said license
and that the same will terminate at eight,
o’clock A. M. on Monday the twenty-fifth day
of December, Nineteen hundred and eleven,
unless sooner terminated by this Company
for any breach of the conditions of said
license.

Yours truly,

Motion Picture Patents Company,
By II. N. Marvin, Vico President."

(J) The plaintiff further alleges, upon informa¬
tion and belief, that tho threatened cancellation
of the plaintiff’s license is a part of the aforesaid
conspiracy among tho defendants to restrain
trade and commerce among the several states
and with foreign nations in tho motion picture
business and particularly in the supply of films
and apparatus, and to monopolize and obtain
complete nnd exclusive control of tho motion pic¬
ture business in the United States and Canada.

Nineteenth.— The plaintiff further alleges,
upon information and belief, that tho defendants,
oven if restrained from cancelling the plaintiff’s
license, will seek to accomplish the same object
and eliminate the plaintiff from the motion pic¬
ture business by means of withholding from the
plaintiff the supply of films which it has hereto¬
fore received from the licensed manufacturers, or
to cripple and destroy tho plaintiff’s said business
by discriminating against tho plaintiff in supply,
ing snob film. It is essential to the success of the
plaintiff’s business that films containing photo¬
graphs of new scenes and subjects be promptly
supplied by said licensed manufacturers, without
discrimination, as heretofore, in order that it may
be able to compete with the General Film Com¬
pany in the distribution of such films to exhibitors.

Twentieth : The plaintiff further alleges, upon
information and belief, that the defendants’
threatened refusal to deal with the plaintiff and
to supply it with films produced by the licensed
manufacurers under patents owned by the de¬
fendant Patents Company, is in violation of the
duty owing by the defendants to the plaintiff, and

124

( Complaint .)

to the public generally, and in violation of the
plaintiff’s contract rights, by virtue of the plain¬
tiff's aforesaid license, Exhibit A, and the other
contracts mentioned in this complaint; and that
the organization of the defendant Patents Com¬
pany, and the assignment to it of the aforesaid
letters patent, and the licenses and agreements
existing between said Patents Company and
said licensed manufacturers, and the organization
of the defendant General Film Company, nnd
its control by said Patents Company and said
125 licensed manufacturers, and the methods ot busi¬
ness pursued by all the defendants, constitute a
contract, combination and conspiracy in restraint
of trade and commerce among the several States
nnd with foreign nations, nnd an attempt to mo¬
nopolize, nnd a combination nnd conspiracy among
all the defendants to monopolize, the trade and
commerce among the several States and with
foreign nations in motion picture apparatus and
films and in the motion picture business general¬
ly; nnd that such contract, combination nnd con¬
spiracy and attempt' to monopolize are in viola¬
tion of an Act of Congress of the United States,
I2® approved July 2, 1890, commonly known as the
Sherman Anti-Trust Act, which provides as fol-

“ Section 1. Every contract, combination
in the form of trust or otherwise, or con¬
spiracy, in restraint of trade or commerce
among the several States, or with foreign
nations, is hereby declared to be illegal.
Every person who shall make any such con¬
tract, or engage in any such combination or
conspiracy, shall be deemed guilty of a mis¬
demeanor, and, on conviction thereof, shall
bo punished by fine not exceeding five thous-

( Complaint .)

and dollars, or by imprisonment not exceed¬
ing one year, or by both said punishments,, in
the discretion of the court.

“Section 2. Every person who shall mo¬
nopolize, or attempt to monopolize, or com¬
bine or conspire with any other person or
persons to monopolize, any Dart of the trade
or commerce among the several States, or
with foreign nations, shall bo doomed guilty
of a misdemeanor, and, on conviction thereof,
shall he punished by fine not exceeding five
thousand dollars, or by imprisonment not
exceeding one year, or by both said punish¬
ments, in tbe discretion of tbe court.”

■f

■a

■X

(a) The plaintiff has heretofore, since January
20, 1901), dealt and still continues to deal with all
of the defendants designated ns licensed manu¬
facturers, and 1ms leased largo quantities of films
from each of them, and uninterrupted continuance
of the supply of such films from each of said de¬
fendants is essential to the plaintiff’s business.
Said defendants, the licensed manufacturers, will
out off the plaintiff’s supply of films if the plain¬
tiff’s license should be cancelled, or, even without
such cancellation, if instructed so to do by said
Patents Company, or by agreement among them¬
selves for the purpose of forcing the plaintiff
to retire from business as a rental agency. It
wdll be impossible for the plaintiff to secure ade¬
quate service from the licensed manufacturers,
such ns the plaintiff requires for the successful
carrying on of its business, nnd such as it has
heretofore had, without the aid of the injunction
of this Court.

■3°

( Complaint .)

mieos herein set forth and is rolievable only in a
court of equity where matters of this sort are
properly cognizable and reliovnblo. The plain¬
tiff’s damages cannot bo mousui'od in money or
ascertained at law.

Whehbkoub, tho plaintiff prays for a docroo :

(z) Restraining the • defendants, and each of
them, and their and each of their officers, direc¬
tors, attorneys, agents and servants, during tho

131 life of reissued letters patent number .12192, from
interfering with the plaintiff's business, or from
discriminating against it, or from censing to sup¬
ply tho plaintiff, without delay or discrimination,
with motion picture films produced by tho defend¬
ants, designated ns licensed manufacturers, re¬
spectively, upon the plaintiff’s orders, upon tho
plaintiff’s paying for such films and continuing to
perform tho conditions of its license, Exhibit A;
and enjoining and restraining said defendants,
tboir officers, directors, attorneys, agents and ser¬
vants, from in any wise altering, to the plaintiff’s
prejudice, in completeness and promptness of sor-

132 v'uoi or otherwise* the methods of business hereto¬
fore and now prevailing between the plaintiff and
tho defendants designated as licensed manufact-

(5) Enjoining and restraining the defendants,
and each of them, and their and each of their offi¬
cers, directors, attorneys, agents and servants,
from taking from the plaintiff’s possession or
that of any customer or exhibitor, or in any wise
interfering with, by means of actions of replevin,
or otherwise, any' of the film possessed by tho

( Complaint .)

plaintiff ; and restraining tho defendants, and par¬
ticularly tho General Film G'ompuny, its officers,
directors, attorneys, agents and servants, from
interfering with the plaintiff’s business or cus¬
tomers, and from attempting to alienate or entice
said customers from the plaintiff';

(if) Enjoining and restraining the defendant
Patents Company, its officers, directors, attorneys
and agents, during tho life of said reissued let¬
ters patent number 12192, from cancelling or at¬
tempting to cancel the plaintiff’s license, Exhibit
A, or from in any wise interfering with tho plain¬
tiff’s business) or from requiring or inducing the
defendants designated as licensed manufacturers,
or any of them, to cut off’, limit, or in any wise
make loss efficient than heretofore, the supply of
films by said licensed manufacturers, respectively,
to the plaintiff, or from in any wise interfering
with tho business relations hitherto and now ex¬
isting between the plaintiff and said licensed man¬
ufacturers; and tho plaintiff prays that an order
may be made restraining the defendants as here¬
inbefore prayed, during the pendency of this
action.

(d) Declaring the plaintiff’s license in full force
and effect, and not subject to cancellation, except
for tho plaintiff’s breach of some condition or
stipulation in said license contained, during the
life of said reissued letters patent number 12192;

(/>) Declaring void and of no effect the attempt¬
ed cancellation of said license made by the defend¬
ant Patents Company on December 7, 1911;

136 ( Complaint .)

(ff) For such other, further or different relief
in the promises ns may bo agreeable to equity and
seem moot to the Court; besides the costs of this
action.

Rogers & Rogers,

Attorneys for Plaintiff,

Office and Post Office Address:

No. ICO Broadway,
Borough of Manhattan,

New York City.

'37 Samuel Untermyer,

Of Counsel.

Stale and County of New York, ss. :

'38

William Fox, being duly sworn, says :

,.I n,!1.nil°n'cel'> to "’it’ President, of the plain-
till, which is a domestic corporation.

I have road the foregoing complaint and know
the contents thereof, and the same is true of my
own knowledge, except as to the matters therein
stated to be alleged upon information and belief,
and as to those matters I believe it to be true.

William Fox.

.16th1 day' "of
Rap

before me
December, 1

this)
1911. (

Notary Public,

New York County.

(Cc 1 1 t—i rut a.) ,3g

Exhibit A.

Exoiiangb License Agreement.

Whereas, the Motion Picture Patents Com¬
pany of New York City (hereinafter referred to
as the “Licensor”) is the owner of all the right,
title and interest in and to reissued Letters Pat¬
ent No. 12,192, dated .January 12, 1902, granted to
Thomas A. Edison, for Kinetoscopic Film, and
also Letters Patent Nos. 578,180, 080,749, 580,953,
588,910, 073,329, 073,992, 707,934, 722,382, 744,- 140

251, 770,937, 771,280, 785,205 and 785,237, for in¬
ventions relating to motion picture projecting ma¬
chines; and

Whereas, The Licensor has licensed the Amer¬
ican Mutoscopo and Biograph Company of New
York City, the Edison Manufacturing Company
of Orange, Now Jersey; the Essanny Company of
Chicago; the Kalom Company of New York City;
George Kleino of Chicago; Lubin Mnnufacuturing •
Company of Philadelphia; Pa the Frores of New
York City; the Selig Polyscope Company of Chi¬
cago; and the Vitagraph Company of America, of '4'
New York City, (hereinafter referred to ns “Li¬
censed Manufacturers or Importers”) to manu¬
facture or import motion pictures under the said
reissued Letters Patent and to lease licensed mo¬
tion pictures (hereinafter referred to as “Li¬
censed Motion Pictures”) for use 011 projecting
machines licensed by the Licensor; and

Whereas, the undersigned, (hereinafter referr¬
ed to ns the “Licensee”) desires to obtain a li¬
cense under said reissued Letters Patent No. 12,-

,ll

( Complain I — Exh i bit A.)

192, to lease from the Licensed Manufacturers
and Importers licensed motion pictures ami to
sub-let the said licensed motion pictures for use
on projecting machines licensed by the Licensor;

Now, therefore, tub partiijs HERETO, in consid¬
eration of tiie covenants herein, have agreed as
follows :

(1) The Licensor hereby grunts to the Licensee
for the term and subject to the conditions express¬
ed in the “Conditions of License” hereinafter set
forth, tiie license, under the said reissued Letters
Patent No. 12,192, to lease licensed motion pic¬
tures from the Licensed Manufacturers and Im¬
porters and to sub-lease said license motion pic¬
tures for use only on projecting machines li¬
censed by the Licensor under Letters Patent
owned by it.

(2) The Licensee covenants and agrees to con¬
form with and strictly adhere to and be bound by
all of the “Conditions of License” hereinafter set
forth, and to and by any and all future changes in
or additions thereto, and further agrees not to do
or softer any ol the acts or things thereby prohib¬
ited, and that the Licensor may place and publish
the Licensee’s name in its removal or suspended
list, in the event of the termination of this agree¬
ment b.vtiie Licensor, or In' casooTnnyvrolnHon
thereof, and may direct the Licensed Manufac¬
turers and Importers not to lease licensed motion
pictures to the Licensee, the Licensee hereby ex¬
pressly agreeing that such Licensed Manufactur¬
ers and Importers shall have the right to cease
such leasing when so directed by the Licensor;

(Complaint— Exhibit A.) Ii)5

and the Licensee further agrees that the signing
of tins agreement constitutes a cancellation of any
or all agreements for the sale of licensed motion
pictures made prior to this agreement by and be¬
tween the Licensee and any or all licensed manu¬
facturers or importers, except as to any clause in
said agreements relating to the return of motion
picture film to the several licensed manufactur¬
ers or importers. It is further understood and
agreed by the Licensee that the license hereby
granted is a porsonal one and not transferrablo or
assignable, and the Licensee hereby recognises *4^
and acknowledges the validity of the suid reissued
Letters Patent No. 12,192.

Conditions of License.

1. From the date of this agreement the Licensee
shall not buy, lease, rent, or otherwise obtain any
motion pictures other than licensed motion pic¬
tures and shall dispose of any motion pictures only
by the sub-leasing thereof under the conditions
hereinafter sot forth.

2. The ownership of each licensed motion pic- '47
tore leased under this agreement shall remain in

the Licensed Manufacturer or Importer from
whom it may have been leased, the Licensee, by
the payment of the leasing price acquiring only
the license to sub-let such motion picture subject
to the conditions of this agreement. Such license
for any motion picture shall terminate upon the
broach of this agreement in regard thereto, and
the Licensed Manufacturer or Importer from
whom it may have been leased shall have the right
to immediate possession of such motion picture,

148 (Complaint— Exhibit A.)

without liability for any leasing price or other
sun), which the Licensee, or the person in whoso
possession said motion picture is found, may have
paid therefor.

3. The Licensee shall not sell nor exhibit li¬
censed motion pictures obtained from any Li¬
censed Manufacturer or Importer, either in the
United States or elsewhere, but shall only sub-let
such licensed motion pictures [and only for use in
the United States and its territories]* and only

149 to exhibitors who shall exclusively exhibit li¬
censed motion pictures, but in no case shall the
exhibitor be permitted to sell or sub-let or other¬
wise dispose of said licensed motion pictures.

4. The leasing price to be paid by the Licensee
to the Licensed Manufacturers or Importers, or
the terms of payment for or shipment of licensed
motion pictures, shall in no case bo loss or more
favorable to the Licensee than that defined in the
leasing schedule embodied in this agreement, or
any other substitute leasing schedule, which may
bo regularly adopted by the Licensor, and of which

*5° notice shall be given to the Licensee hereafter.

5. To permit the Licensee to take advantage of
any standing order leasing price mentioned in such
schedule, such standing order with any Licensed
Manufacturer or Importer shall bo for one or
more prints of each and every subject regularly
produced, and offered for lease' by such manu¬
facturer or importer as a standing order subject
and not advertised as special by such Licensed

(Com pi a in l—Exh ih it A. )

Manufacturer or Importer; and shall remain in
force for not less than fourteen (14) consecutive
days. Any standing order may be cancelled or
reduced by the Licensee on fourteen (14) days’
notice. Lxtra prints in addition to a standing
order shall be furnished to the Licensee at tko
standing order leasing price.

0. The Licensee shall not sell, rent, or otherwise
dispose of, either directly or indirectly, any li¬
censed motion pictures (however the same shall
have boon obtained), to any persons, linns or cor¬
porations or agents thereof, who may bo engaged
either directly or indirectly in selling or renting
motion picture films.

7. The Licensee shall not make or cause to be
made, or permit others to make reproductions or
so-called “dupes” of any licensed motion pic¬
tures, nor soli, rent, loan or otherwise dispose of
or deal in any reproductions or “dupes” of any
motion pictures.

8. The Licensee, shall not deliberately remove
the trademark or trade-name or title from any li¬
censed motion picture, nor permit others to do so,
but in case any title is made by the Licensee, the
Manufacturer’s name is to be placed thereon, pro¬
vided tlint in making any title by the Licensee, the
Manufacturer’s trademark shall not be repro¬
duced.

0. The Licensee shall return to each Licensed
Manufacturer or Importer (without receiving any
payment therefor, except that the said Licensed
Manufacturer or Importer shall pay the trans-

■54

( Com phi ill t — Exit ihi I .4.)

portalion charges incident to the return of the
sumo) on the first day of every month commenc¬
ing seven months from the first day of the month
on which this agreement is executed, an equiva¬
lent amount of positive motion picture film in run¬
ning feet (not purchased or leased over twelve
months before) and of the make of the said Li¬
censed Manufacturer or Importer, equal to tho
amount of licensed motion pictures that wus so
leased during the seventh month preceding tho
day of each such return with the exception, how-
155 over, that whore any such motion pictures are de¬
stroyed or lost in transportation or otherwise, and
satisfactory proof is furnished, within fourteen
(14) days after such destruction or loss, to tile
Licensed Manufacturer or Importer from whom
such motion picture was leased the Licensed Man¬
ufacturer or Importer shall deduct the amount so
destroyed or lost from tho amount to he returned.

10. The Licensee shall not sell, rent, sub-let,
loan or otherwise dispose of any licensed motion
pictures (however the same limy have boon ob¬
tained) to any person, firm or corporation in the
'5 exhibition business, who may have violated any
of the terms or conditions imposed by the Li¬
censor through any of its licensees and of which
violation the present Licensee may have had no¬

il. The Licensee shall not sub-lease licensed
motion pictures to any exhibitor unless a contract
with said exhibitor (satisfactory in form to the
Licensor) is first exacted, under which the exhi¬
bitor agrees to conform to all the conditions and
stipulations of the present agreement applicable

( Complaint — Exhibit A.) , ^

to tho exhibitor; and in the case of an exhibitor
who may operate more than a single place of ex¬
hibition, a similar contract shall ho exacted in
connection with each place so operated, and sup¬
plied with licensed motion pictures by the Li¬
censee.

12. -After February 1st, not), the Licensee shall
not sub-lease any licensed motion pictures to any
exhibitor unless each motion picture projecting
machine on which tho licensed motion pictures

are to bo used by such exhibitor is regularly li- ■ 58
censed by' tho Motion Picture Patents Com¬
pany, and the license fees therefor have been
paid; and the Licensee shall, before supplying
such exhibitor with licensed motion pictures,
mail to tho Motion Picture Patents Company,
at its office in New York City, a notice, giving the
name of tho exhibitor, tho name and location of
tho place of exhibition (and, if requested to do
so by tho Licensor, its seating capacity, hours of
exhibition and price of admission, and the num¬
ber and make of the licensed projecting machine
or machines), together with the date of the com¬
mencement of the subleasing, all in a form ap- 1 *9
proved by the Licensor. The Licensee, when
properly notified by the Licensor, that the license
fees of any exhibitor for any projecting machine
have not been paid, and that the license for such
projecting machine is terminated, shall immedi¬
ately cease to supply such exhibitor with licensed
motion pictures.

13. The Licensee agrees to order during each
month while this agreement is in force, for ship¬
ment directly to the place of business of the Li-

j gQ (Complaint— Exhibit A.)

conscc in the City for which this agreement is
signed, licensed motion pictures, the net leasing
prices for which shall amount to at least $2,000.

14. The Licensee shall, on each Monday during
the continuance of this agreement, make or mail
payment to each Licensed Manufacturer and Im¬
porter for all invoices for licensed motion pic¬
tures which have been received by tbo Licensee
during the preceding week.

1 6 ■ 15. This agreement shall extend only to the

place of business for the sub-leasing of motion
pictures maintained by tbe Licensee in the City
for which this agreement is signed, and the Li¬
censee agrees not to establish or maintain a place
of business for tbe sub-leasing of motion pictures,
or from which motion pictures are delivered to
exhibitors, in any other City, unless an agreement
for such other City, similar to the present agree¬
ment, is first entered into by and between the Li¬
censee and the Licensor.

1G. This Licensor agrees that before licensing

162 any person, firm or corporation in the United
States (not including its insular territorial pos¬
sessions and Alaska) to lease licensed motion pic¬
tures from Licensed Manufacturers and Import¬
ers and to sub-lease such motion pictures, it will
exact from each such licensee, an agreement sim¬
ilar in terms to the present agreement, in order
that all licensees who may do business with the
Licensed Manufacturers and Importers will be
placed in a position of exact equality.

(Complaint— Exhibit A.) ,63

If). It is understood and specifically covenanted
by the Licensee, that the Licensor may terminate
this agreement on fourteen (14) days written no-
tico to the Licensee of its intention so to do, and
that if the Licensee shall fail to faithfully keep
and perform the foregoing terms and conditions
of lease, or any of them, or shall fail to pay the
leasing price for any motion pictures supplied by
any Licensed Manufacturer or Importer when
duo and payable, according to the terms of this
agreement, tbo Licensor shall have the right to
place the Licensee’s name on an appropriate sus- 164
pended list, which the Licensor may publish and
distribute to its other licensees and to exhibitors
and to flic Licensed Manufacturers and Import¬
ers and to direct the Licensed Manufacturers and
Importers not to lease licensed motion pictures
to the Licensee, and the exercise of either or both
of these rights by the Licensor shall not ho con¬
strued us a termination of this license, and the
Licensor shall also have the right in such case,
upon appropriate notice to the Licensee, to im¬
mediately terminate the present license, if the
Licensor shall so elect, without prejudice to the
Licensor’s right to sue for and recover any dam- '®5
ages which may have been suffered by such breach
or non-compliance with the terms and conditions
hereof bv the Licensee, such breach or non-com¬
pliance constituting an infringement of said re¬
issued Letters Patent. It is further agreed by the
Licensee that if this agreement is terminated by
the Licensor for any breach of any condition here¬
of, the right to possession of all licensed motion
pictures shall revert twenty days after notice of
such termination, to the respective Licensed
Manufacturers and Importers from whom they

A rebate of 10% will bo allowed on all leases
ol licensed motion pictures, except at the 7 cent
and 5 cent prices, which are net; said rebates to
be due and payable between the 1st and loth days
of each of the months of March, May, July, Sep¬
tember, November and January, on all films leas¬
ed during the two months preceding each said
period, provided all the terms and conditions of
this license agreement have been faithfully ob¬
served.

(Complaint — Exhibit A.)

TERMS.

All shipments are made F. 0. B. lessor’s office
at lessee’s risk.

All motion picture films are to be shipped to
lessee’s office only.

The lengths at which motion picture films are
listed and leased are only approximate.

Motion Piotuiie Patents Company

By D. MacDonald, General Manager.

Licensee’s Signature

Greater New York Film Rental Co.

Secy.

Place of business for which this license is grant¬
ed Street and No. 24 Union Square

City New York State New York.

Date Jan.' 20/09.

SUPREME COURT,

NEW YORK COUNTY.

Greater New York Film Rental
Company,

Plaintiff,

against

Motion Picture Patents Com-
pany nnd others,

'' Defendants.

State and County op New York — ss:

William Fox, being duly sworn, says :

I am President of the plaintiff in this action,
nnd linve rend tile accompanying complaint, veri¬
fied hy mo, nnd all the allegations therein con¬
tained, not stated to he made upon information
and belief, are true of my own knowledge.

I first became interested in the motion picture
1 74 business in 1900, as an exhibitor, and from time
to time acquired control of various motion picture
theatres, now numbering ton of the largest, best
equipped and best patronized, in the Boroughs of
Manhattan nnd Brooklyn, City of Now York, in
which motion pictures obtained from the defend¬
ants designated in the complaint as licensed manu¬
facturers have been and still are displayed to the
public.

The plaintiff was organized in March, 1907, for
the purpose of purchasing projecting machines
and films, and in turn leasing machines and films

( Affidavit of William Fox.) , 75

to exhibitors. The business of the plaintiff is
and ever since its organization has boon, that of a
rental agency, the nature of which is explained
in the complaint, and appears heroin.

From the time of its organization, until Jan¬
uary 20, 1909, when it perforce uecnptod the license
agreement, Exhibit A, attached to the complaint,
the plaintiff carried on its business hy purchas¬
ing outright both projecting machines and films,
and particularly the latter, from all the defend¬
ants heroin designated in the complaint as licens¬
ed manufacturers, except the Melies Manufnctur- ' 76
ing Company. Until about January, 1908, those
manufacturers were not “licensed manufactur¬
ers,” but were carrying on business independently
of one another, and there was active competition
among them. They sold both apparatus and films
outright, both to rental agencies and to exhibitors,
and served all comers without discrimination.

There were, also, other importers of foreign film
doing business in the United States, and the plain¬
tiff dealt with them prior to the early part of 1908,
when it was obliged to cease such dealings, owing
to the restrictions placed upon the rental agencies
by flic manufacturers when they combined under 177
the license of the Edison Manufacturing Com¬
pany, as next hereinafter stated.

In or about January, 1908, the defendants desig¬
nated in the complaint ns licensed manufacturers,
except the Melies Manufacturing Company and
George Ivloine and the American Mutoscope &
Biograph Company, accepted licenses from the
Edison Manufacturing Company to manufacture
under the patents owned and controlled by that
company. Theretofore, a number of those manu¬
facturers had been manufacturing, ns I under-

(Affidavit of William Fox.)

stand, under patents owned or controlled by thp
American Mutoscope & Biogrnph Company, or
without any licenses whatever, and in defiance of
the patents both of the Edison Company and] of
the Mutoscope Company.

There was much litigation between the Edison
Company and the Mutoscope Company, involving
also manufacturers under those respective pat¬
ents, and also rental agencies and exhibitors using
machines and, films claimed by the one company
or the other to be infringement's.

>79 After the aforesaid manufacturers accepted
Edison licenses, there was still active competition
on the part of Kleine, who was an importer , of
loreign films, and the Mutoscope .Company and
its licensees operating under its patents. There
was a number of manufacturers so operating
under the Mutoscope patents.

The manufacturers under the Edison license
refused to sell apparatus or, films to any agencies
or exhibitors that would not deal exclusively with
them. The Mutoscope Company and the manu¬
facturers operating under it's patents made no
j go such restrictions, and sold without discrimination.
The apparatus and films produced under the Edi-
son piilonts wore generally regarded as superior
to the others, and the result was that the manu¬
facturers under those patents acquired a largo
part of the business, although the rival manu¬
facturers were carrying on an extensive trade.

The prices of film produced by the manufactur-
-•■s undei the Edison license varied until about
Juno 1, 1908, when the Edison Company reduced
its price from 12 cents per running foot for imme¬
diate release film— meaning film to be used by all
of the rental ugencies throughout the United

(Affidavit pf William Fax.) ,g,

States on the same designated dale— to 9 cents
per running foot, loss 10 per cent if paid for
within one week after delivery. The Vitagraph
Company reduced its price for the same kind of
film from 10, 12 and 14 cents pur running foot to
9 cents per running foot, less 10 per cent if paid
for within one week after delivery. All the other
manufacturers under the Edison license made a
uniform price of 9 cents per running foot, loss
the 10 per cent rebate. Prior to June 1st, the
various prices had been net, without any rebate,
although the purchasers were required to pay for 182
the film either C. 0. D. or within one week, and
unless they did so no more film were shipped to
them.

The object of making the price 9 cents per run¬
ning foot, loss the 10 per cent rebate was to en¬
able these manufacturers operating under the
Edison license to control the business and drive
the other manufacturers and importers out of the
market. The cost of importing foreign film, after
payment of duly, was fully 8 cents per running
foot, and the price made by these licensed manu¬
facturers — 9 cents, less 10 per cent rebate —
brought their price down practically to the ac- 1 3
tunl cost of importing, or certainly of importing
and handling the foreign film. The result was,
that the Edison licensees acquired 85 or 90 per¬
cent of the whole business of the country.

In the summer or early fall of 1908, the advis¬
ability of a combination between the Edison li¬
censees and the American Mutoscope & Biograph
Company and its followers must have become ap¬
parent, and this was furthered by the active and
constant litigation between the Edison Company
and the Mutoscope Company over their patents.

1 84

(Affidavit of William Fox.)

Between June 1st nml September 1st, 1908, the
Edison licensees had so largely acquired the bus¬
iness of the film rental agencies and exhibitors
that they could and did, on September 1, 190S,
increase the price for their aforesaid film to 11
cents per running foot, with the same 10 per cent
discount.

It was staled by some of the manufacturers, at
a mooting of the film rental agencies in the sum¬
mer of 1008, that the Edison licensees would
make a uniform price of 9 cents, with the 10 per
185 cent rebate, for three months after .Tune 1, 1908,
for the purpose of driving the independents out
of the field. As has been stated, Hint purpose
was largely accomplished by September 1, 1908,
in that the rental agencies and exhibitors, to the
extent of 85 or 90 per cent of the whole number,
bought their film from the Edison licensees and
left the so-called independent manufacturers and
importers. Having accomplished their purpose,
the Edison licensees increased their price to 11
cents, loss 10 per cent, ns has boon staled.

The situation was ripe for a combination bo-
jgg tween the Edison licensees and their rivals, the
Mutosoopo Company and its followers, and the
result was the formation of the defendant Pat¬
ents Company in or about December, 1908. Since
that time, the uniform price of 11 cents per run¬
ning foot, loss 10 per cent rebate, has boon main¬
tained by the Patents Company for what are
known as standing orders; that is, the rental
agency is required to keep a standing order for
a certain number of reels of film per week with
some or all of the manufacturers, and this can be
cancelled only on two weeks’ notice. For film not
included in the standing order, the agency must

(Affidavit of William Fox.)

pay the list, price, which is, and has been since the
I ntents Company was formed, 13 cents per run-
ning loot, while betore the Patents Company was
formed it was 12 cents per running foot.

The difference with regard to films since the
combination is not only what has already been
mentioned, but that before the combination the
rental agencies became the absolute owners of
the film, and that; since the combination they are
mere lessees, but that, pursuant to the provisions
of the license agreement, like Exhibit A attached
to the complaint;, the agencies are required to re¬
turn the film to the manufacturers within' a com-'
pnrativcly short period, long before the life or
usefulness of the films has been exhausted. The
agencies, while thus paying the full value of the
.films, have only a restricted use of them, and the
supply is thus much curtailed..

Before the combination among the defendants
under the Patents Company was formed, there
wore about 120 rental agencies throughout the
United States buying apparatus and films from
the defendants now designated as licensed manu¬
facturers, and engaged in leasing such apparatus
and films, particularly the latter, to exhibitors.
About 20 of such rental agencies existed and car¬
ried on business in the Borough of Manhattan,
City of New York. After the combination was
effected, the defendant Patents Company refused
to license many of the existing rental agencies,
and reduced the number in the United States to
about 75, which received licenses from the Pat¬
ents Company, of which number 9 wore licensed
in the Borough of Manhattan.

Those 75 rental agencies have all, except the
plaintiff, been driven out of business by the do-

( Affidavit of William Fox.)

^y/(&

OKT,/'^ r

fondants sineo tho combination was effected. Of
tlio 9 licensed in the Borough of Manhattan, 2
/were eliminated by tlio arbitrary cancellation of
^ their licenses without cause, and without the pay¬
ment to the owners of anything whatever, and
the General Film Company succeeded to their
‘ business. Of the remaining 7, -the business and
good-will of 6 wore sold to the General Film
| Company on terms dictated by Mr. J. J. Kennedy
nnd his associates, including the licensed manu-
i lecturers, controlling tho Patents Company nnd
91 the General Film Company. The owners of those
agencies had practically no option about selling.
They were confronted with the alternative of ac¬
cepting tho terms offered them or suffering the
cancellation of their licenses theretofore granted
by tho Patents Company.

J B.v similar means, all the licensed rental
/ agencies existing in the United States outside of
tho Borough of Manhattan wore eliminated, some
by arbitrary cancellation of their licenses, and
others by juilaixxuljside to the General Film Com-
. pany under threats ot such cancellation.

x I «m well acquainted with most of the officers
>2 and directors of the Patents Company and the
General Film Company, and have had close
observation of they>hgain.es§jinitluicls for about
three years, and'-pknow wheroofj spoafc'N

A _ The defendant Parents Company was organ-
\ ized in or about December, 1908,’ and in that

'' 1 month t;he leading spirits in the Patents Com-

,J> > . P<any, viz. : Messrs. Frank U. ' Dyer, J. ,T.
• )/«.^'Ko,1,lec1y’ H- K Marvin, J. A. Borst, and George

P. .A

( Affidavit of William Fox.) |g3

Kleine, hold a meeting in the Borough of Man¬
hattan, City of Now York, with representatives
of all the defendants herein designated as licens¬
ed manufacturers, except tho Melics Manufactur¬
ing Company. The proceedings of that meeting
have since become notorious in the trade, and an
outline of the plan there evolved, couched, in
euphemistic terms, and without disclosure of all
the details, was afterwards stated to me and to
other representatives of rental agencies at a
meeting hold in New York a little later, to which
I shall presently refer.

At the first meeting m New York, the Patents
Company and tho licensed manufacturers entered
into agreements, by which all the patents owned
or controlled by the manufacturers, and which
are specified in the complaint, wore assigned to
the Patents Company, and tho licensed manufac¬
turers accepted identical licenses enabling them
to operate under said patents, the substance of
which license agreement is set forth in the com¬
plaint

It was also agreed at said meeting, by the Pat¬
ents Company and tho manufacturers, as is evi¬
dent from the terms of the licenses to rental '95
agencies, of which Exhibit A attached to tho com¬
plaint is a specimen, that tho prices for leasing
films should be fixed and maintained, and they
were fixed, and have ever since been maintained
at the sums stated in said Exhibit A, to wit :

( Affidavit of William Fox.)

Said prices, except the 5-cont and 7-ee.nt rates,
are subject to a rebate of 10 per cent payable be¬
tween the 1st and loth days of each of the months
March, May, .Inly, September, November and Jan¬
uary, on all films leased during the two months
preceding each said period, provided all the lorms
and conditions of the license agreement have been
faithfully observed.

Shortly after this first meeting another meet¬
ing was called in New York, which was attended
by representatives of all or nearly all the film
197 rental agencies in the United Stales and by repre¬
sentatives of all or nearly all of the defendants
dcsiiriiutcd as licensed manufacturers (except the
Melies Manufacturing Company, which was not
at that time in existence). I11 further reference in
this affidavit to the licensed manufacturers it
should bo understood that the Melies Manufac¬
turing Company is not included, but the George
Melies Manufacturing Company, n corporation
doing business in Chicago and engaged in manu¬
facturing film, is included. This meeting was
also attended bv a number ol the officers of the
Patents Company, including Dwight Macdonald,
'9° General Manager of the Patents Company.

The representatives of the rental agencies wore
informed that the .manufacturers of film and ma¬
chines laid all taken licenses from the Patents
Company and that films and machines would no
longer be sold outright, but only leased, and only
to such rental agencies as should bo licensed by
the Patents Compuny. Mr. Macdonald read the
license agreement which all rental agencies would
be required to sign. It was in all. respects like
Exhibit A attached to the complaint herein.

There was most vehement protest, on the part
ot the representatives of the rental agencies, but

( Affidavit of William Fox.)

it was useless and all attempts to secure modifica¬
tion of the provisions of the license agreement
were in vain, and wo all finally realized that our
only choice was either to accept the terms of the
license agreement or.g^oiit,of business. , . . • —

I objected vigorously to signing the agreement,
hut finally accepted it in hehalf of the plaintiff
because there was no alternative if the plaintiff
wished to continue business.

Ever since January 20, 1009 when said Exhibit
A was signed the plaint! tl has fully performed all
the terms and conditions of that agreement on
its part.

Pursuant to one of the provisions of the agree¬
ment the plaintiff has returned to the licensed
ni.nnu lecturers film which it had purchased out¬
right and paid for, and which hud cost the plain¬
tiff upwards of *:i0(),000, and which at the time r
of its return was fairly worth upwards of $100,- \
000. To bo sure, its market value had been de- '
stroyod by the action of the Patents Company • j
and the licensed manufacturers in prohibiting the
use of that film, but it was worth fully $100,000
for exhibition purposes if it; could have been used
or sold. :

Ill the early part of September, 10.1.1 I was
sent for by Mr. P. L. Waters, General Manager
of the General Film Company, and called upon
him at his office 111 the office of the General Film
Company, 200 Fifth Avenue, New York City.

1 remember our conversation quite distinctly,
and quote it ns nearly as I can recollect, in the
words used:

mt to advise you, in a friendly
iv is the right time to offer the

(Affidavit of William Fox.)

Grantor Now York Film Rental Exchange
for sale to tho General Film Company.”

“Wlmt do you moan by that'/ Why is this
tho right time any more than any time? I
lmvo no idea of soiling our business. Wo are
doing well enough.”

Ho said:

203 “Now, Fox, I want to bo your friend. You

know that I am tho General Manager of tho
General Film Company, and I know tho in¬
side workings, and my advice to you would
be to offer your plant for sale now, for if you
don’t you might never have another oppor¬
tunity.”

I said:

“Now, Waters, what do you mean by that?
Tf it is the idea of the General Film Com¬
pany and tho Motion Picture Patents Com¬
pany and tho manufacturers, to cancel my
license, of course I want to sell my plant anil
sell it quick. If you don’t contemplate job¬
bing me and cancelling my license, why then
I have no idea of selling and don’t want to
sell unless I can sell on the basis of the earn¬

ing capacity. My plant earning from $(>(),-
000 to $75,000 last year, I would expect any¬
where from $000,000 to $750,000.”

“Why”, ho said; “Don’t bo foolish. I
don t say that we are going to cancel vonr
license, and I don’t say that wo are goiii" to
.lob yoin, but I will advise you that if von
don t offer your plant for sale now, as I said
before, I don’t think you will get another

(Affidavit of William Fox.)

*nV- 0rs’ notJ l*o frank with me? If it

is tno idea ot your Company and tho Patents
Company to have my license taken away, why
i ca/fcoU g0t t0 t,l»° “lm0st nny P™° that

“Under the circumstances, you claiming
to bo my friend, try and get for mo $150,000.”

“N°w /ou aro 00mi,)S to J’o«r senses, ex-
S r i' V’0," are. asking too much monov,
but I think that this would bo a good time to
call in my friend J. J. Kennedy who, vou no
doubt know, is the President of tho General
n Jim Company, Treasurer of the Motion
iicture Patents Company and Vice-President
ot tlie American Mutoscope & Biograph Com- 207
pany. He, being the big man here in all of '
these companies, could talk to you officially
and whatever lie did would be upheld by the
various companies ho represents.”

He then brought Mr. Kennedy in. Mr. Ken¬
nedy said :

{Affidavit of William Fox.)

“Mr. Kennedy, the only tiling you can do
l'or me is to assure me that you don’t intend
to job mo by cancelling my license.’’

“I was speaking to
buying bis exchange f
Company. ’ ’

/ V jf

/A,

“Have you got a price in mind, Mr. Pox
as to wlmt you would like to have for yom
plant?” J

I repeated to Kennedy the exact conversation
that I bad with Waters in the first instance,
Kennedy said:

A “Of course you understand the selling of
/ your plant is not compulsory, and if you ex-
/ poet any such figures ns that, why go right
/ along and don’t bother about us; but if you
want oar figures I would bo glad to lot Vou
know bow much we think your plant is worth
and that is made up in table form, the exact
i t liA, P“Kl for every exchange that

''e bought throughout the country. These
of film f,™ mado "P recording to the amount
o film that you are buying and according to
the amount of customers that you have on
your books.”

(Affidavit of William Fox.)

. “Mr Kennedy, what are those fin-ares?

SSK-7" 1 “> ‘ -

Mr. Kennedy then took from his pocket a
1(3,101 1 :1 from that orand |0

up Ins figures on a pad, and said:

io bij ro o el a g o lie sa j basis
as wo have bought all of the others— and wo
have bought them all over the oountry-you
would be entitled to $85,000 plus ninety per
cent, of the price that you paid for the last
week pilot to out taking iiossession. which
would bviiig the figures up between $88,000
and $89,000. Ion know the having of these
plants is not all velvet. We have gone to

l9rnnoG!Titfl"7^,lclbo”sllt P'«»ta mid paid
$-.3,000 to $.0,000 for them and found that
they were running on a basis that they were
losing- $18,000 a year, and only by the com-
billed efforts oi this great big* corporation of
ours m being able to shift new customers into
that exchange and taking some of those that
\vere a great distance nwnv from that ex¬
change and taking care of them with one of
our exchanges nearer to that customer, wore
we able to put some of those plants on a pav¬
ing basis.”

“ ■f you paid anything like $25,000 or $30,-
000 for u plant that was losing $18,000 a
year, at your own figures any price that I
asked for mine, considering that it is making
between $(>0,000 and $75,000 a year, would
not be too large, because in mine you have a
manufactured business of a great earning
capacity and without it being controlled by

214

( Affidavit of William Fox.)

your great big corporation and without your
perfecting economies in it, that business,
' oven at a purchase price of $000,000 would
give you a not return of ton per cent.”

Kennedy said:

“Of course we are not buying on that basis
at all. Wo are only buying the plants that
are willing to sell for our price. Wo give
you the best price that we can afford to pay.
Wo give everybody the same price. Wo
make you this offer. You can either take it
or let it go.”

I said:

“Mr. Kennedy, if that is the best that you
can do of course I don’t want to sell. I hope
that I don’t find in the course of the next
week or month or two months, that you have
found some potty charge or other, under
which you will cancel my license in view of
the fact of my not wauling to sell today.’’

Mr. Kennedy said :

“If your license is cancelled. Pox, don’t
blame me. I am now talking for the Gen¬
eral Film Company, and the General Film
Company is not cancelling any license as von
know, your license comes from the Motion
1 icture Patents Company.”

“Mr. Kennedy, having in mind the close
• elat.onJnp between both companies, it will
bo a very easy matter 'for you to arrange to
Imve my license cancelled if yon see fit.”

o which lie replied:

I then bade Mr. Kennedy good-bye. Mr.
Wate. accompanied me downstairs to the cafe
of the Filth Avenue building, where he invited
me to have a drink with him, and said:

like van ,U « smart fellow

ike jou for whom I have had a high regard,
to be so stupid and not to be able to see the
conditions ns they have arisen. Remember
”"1® ^ wheel and you are only

a smnll chip 01 wood in the wav of it You
don t suppose that I, us the driver of my

ol°'Zn!!n’, ‘,"n r'1’]? !° s)vorvu n»y wheel out
oi the load. [ will be obliged to drive over
von every time I conic across you, and the

crush i7 ,0 tnllt ,tll,s ll01lv-v wlleo1 will soon
uush the small chip of wood to splinters.
„n°w’ Jl ' wore y°"’.L would take Kennedy’s
close friendship for you would
lend mo o say that I would lie glad to in-
ercedc with Mr. Kennedy in your behalf and
uy.to get you an even $100,000 for your
business.” *

I thank you Very much. I will think it
over, and I hope that, between now and the
time when I have thought it over, that I
don’t find that, you have been the cause of
having my license cancelled by the Patents
Company.”

That ended the interview.

I lmd no further conversation with anybody
representing the Patents Company or the manu-

(Affidavit of William Fox.)

facturors or the General Film Company until
after the plaintiff received the notice of cancel¬
lation dated November 14, 1911, set forth in the
complaint.

On November 17, 191.1, I telephoned Mr. Ken¬
nedy and made an appointment to call upon him
at his office on the next day (the 18th). I had an
interview with him on that day at winch he and
I were the only ones present. The conversation
was as follows :

I said :

“Mr. Kennedy, you no doubt are aware of
the fact that the Greater Now York Film
Rental Company received the cancellation of
its license on November 14th from the Motion
Picture Patents Company, which wus loft at
our office on Tuesday evening by a mes¬
senger. If I am informed correctly, the man¬
ufacturers had a meeting on Tuesday, No¬
vember 14th, and I suppose that at that
. mooting it was decided that my license
should bo cancelled.”

Mr. Kennedy said:

“You are absolutely right about that. We
did have a meeting on Tuesday, November
14th, and at that meeting it was decided that
your license should bo cancelled.”

“Of course, Mr. Kennedy, I am not sur¬
prised at this, because I have really been ex¬
pecting this over since I had my talk with
you at 200 Fifth Avenue some time ago.”

He said:

ubouHt’..i ‘W yOU t0 feGl that way
about it ut all. 1 don’t want you to think that
talk had anything to do witlftho eance.latio^
ot this license. In tact, to show you that I
, “”*"7 ,to b,u h'lu»dly and that I don’t

mint to light and scrap, I will be glad to open
our negotiations of before and see whether
l ean find some way of settling this up in a
nice, poacehil manner.’ *

Mr. Kennedy, I am glad to hoar you talk
that way. Having m mind that my license
lias been cancelled and after that goes into
e licet I have nothing to sell, I suppose I am
obliged to take almost anything that you
want to give mo.”

“No, I want you to put your price upon it.
I made you our oiler and you turned it down.
I want you to put your price upon it, and if I

‘ ‘ Mr. Kennedy, if you fool that way about it,
I asked $1150,000 the last time I was at your
office, having in mind that my license might
be cancelled. Now that it has boon cancelled
I will take $125,000. That is about $25,000
more than was offered to me at the time I
was down to see you, and surely $25,000 is
not so much to a great big company like

2*6 (Affidavit of William Fox.)

Ho said :

“If you are not ready to accept the price
that I originally offered you, and I don’t
remember exactly what that was, and if you
think yon ought to got $125,000, why then
leave the matter with me and I will ho glad
to take it up with our Executive Committee
and see ,pist wlint I can do for you. You can
expect; to hear from mo by next Tuesday.”

The interview then terminated.

22 7 1 made nn effort to get in touch with Mr. Ken¬

nedy by telephone on Tuesday, November 21st,

. and on every day of that week, and was alwavs
told at his office that ho was not in and they did
not know when to expect him. I left my tele¬
phone number and asked him to ho good enough
to call mo up, which ho did not do. I finally did
roach Mr. Kennedy about Monday, November
27lh, and ho told mo that ho had been unsuccess¬
ful in calling a mooting of the Executive Com¬
mittee and would make every effort to do so in a
day or so and would let mo hoar from him. Not
hearing from him on Tuesday, November 28th, I
22° asked Mr. Rosonbluh of our ofiico to call on one
of the Executive Committee, a Mr. .T. A. Berst,
who was also an officer of the Patlio Froros Com¬
pany, and asked him to arrange a meeting be¬
tween Mr. Berst and myself. On Tuesday after¬
noon, at 3 o’clock I called on Mr. Berst and told
him of the fact that I had been to see Mr. Ken¬
nedy on November 18th and that T loft with him
the price of $125,000, and Mr. Berst said:

“Of course there is whore you have made
a mistake. You know if you had taken the
price that Kennedy originallv offered vou

or if on your visit on November 18th vou
hud suid to Kennedy: ‘I will take wlint vnu
previously offered n,L tl c c 0 lo ,bWn
ny mind that Mr. Kennedy would have closed

but aslIIon°tlUn “P "'ith you nnd then,
but as long as you were looking for more
mono) than our schedule culled for, why, of
course lie would not ileal with you.”

Mr. Berst, I really came hero to ask you
to inttieede lor me, to have my license rein¬
stated, rather than to have the General Film 23°
Company buy me out, beeuuso 1 know of noth-
mg that I have done that could have offended
pj,. 1011 * lcture -Patents Company, or any
of their rules that I have violated so that they
would be justified in cancelling my license.”

ou don’t have to violate any of the rules
ot the Motion Picture Patents Company to
have your license taken away. Your exchange
is in the way ot the General Film Company.”

“If it was not for your exchange wo could
charge almost any price at all for licensed
motion pictures in Greater Now York and the
surrounding territory; but every time that
the General Film Company makes an effort
to raise the price of one of its customers it
finds that the customer has left the General

( Affidavit of William Fox.)

Filin Company and has gone with your con¬
cern to rent films.”

“Mr. Bersl, how can you make a statement
of that kind? You arc not the active man at
the General Film Company’s office.”

lie said :

^ Well, I am one of the Executive G'om-

233 / mittoe, and all of these matters are brought

j to my attention. You ought to be happy that
/ we did not cancel your license long before
I now, and if it were not for the fact that we
I all had a high regard for you we should have
I taken it away a year ago. We allowed you

I to reap the profits for a whole year so that

I when wo did take your license away or when
I we did offer to lniy you out you would feel
| that you got all there was in it for yourself,

j I suppose yon know that you are the last

/ j licensed film exchange in America today, and
that 111 itself ought to be enough compliment
to you, and really you ought not to put any
| obstructions in our way or make it harder

234 than necessary to let our combination go on
raising its prices to whatever it can got, for
you can readily understand that when wo con¬
trol the entire country we are not going to
stop and lot you he our only competitor.”

I said :

“Mr. Borst, then I suppose it is in vain for
me to expect that you are going to be inter¬
ested to have my license reinstated.”

(Affidavit of William Fox.)

He said:

lact, some of the manufacturers are criticis-
mg us lor not taking it sooner. The onlv
thing that I now can do for you-you say
‘“V’? “T to™. Mhs to got Mr. Kennedy
on the telephone tins past week and have boon
unsuccessful— 1 will try to get Mr. Kennedy
on the telephone some lime to-night and will
try to intercede 111 your behalf— that he pays
you the sum of money according to our
schedule that we have paid to all the other
him exchanges that we bought.”

I said :

“When shall I call hack to see you?”
Ho said :

“(.'01110 in tomorrow at 3 o’clock.”

I called on Mr. Bersl on Wednesday, November
29th. Ho said:

“I am awfully sorry to report to you that
I have boon unable up to now to locate Mr.
Kennedy. I cannot imagine why he does not,
come to the telephone when I leave my name.
Ho must have a reason for not wanting to
answer. Since you wore in to see me last
night I could not close mv eves when I lay in
bed. I saw your vision 'standing before 1110
all of the time, and I feel that a great injus¬
tice has been done to you in not giving you
the same sum of money that has been given
to the other film exchanges that wo bought.
Of course I am in hopes that I will bo able to
arrange it for yon — to get vou the money that
I fool you ought to get. If you will go out-

23g ( Affidavit of William Fox.)

side and sit down for a few minutes I will
ring up the three places where I am apt to
iind Mr. Kennedy and see whether I can talk
•with him.”

I then sat outside. Later Mr. Worst opened his
door and called me back into his private office and
informed mo that he was unable to got Mr. Ken¬
nedy on the telephone, gave mo his card with his
home address on and said that I should telephone
him later in the evening, and ho would make every
effort in the meantime to got in touch with Mr.

239 Kennedy. Later in the evening I did ’phono to
Mr. Berst and lie informed mo that ho had talked
with Mr. Kennedy and that I should ring up Mr.
Kennedy. I did got Mr. Kennedy on the tele¬
phone that evening and he asked me to call and
see him on Friday afternoon, December 1st. I
called on Mr. Kennedy on Friday afternoon, De¬
cember 1st. He said:

“Well, Fox, what can I do for you now?”

240 ‘‘Mr. Kennedy, I have been anxiously wait¬

ing to hear from vou on mv proposition of
$125,000.”

He said :

“Of course you know that it is out of the
question now.”

“I don’t see why that is out of the question.
I talked to Mr. Berst day. before yesterday,
and he seems to think that a grave injustice

(Affidavit of I Villkm Fox.) 24I

ommend* n°‘i° ‘7,"°’ 'f,ul would roc-

for my plant-* UteBli ^ bo "»

Ho said :

JZ?Vl0n’i bclio? tlmt *>How ^

ehedu e, and if yo 11 t a moment I
7 II pet my schedules out ami Seo wlmt your'
plant hgures to.” • 242

Ho then took from his safe and pocket certain
schedules, and lie explained to me that his idea
was that in case they fell into the hands of any¬
one else no one else could figure out the basis on
which they made out the prices for tlvoir plants,
without having them both, and for that reason
ho kept half in his pocket and half in the safe.

After going through a lot of litres ho told mo
that the price the schedule showed was $78,000.

1 reminded him of the fact that lie told mo at his
office that I10 was willing to pay $8.0,000, and that
Mr. AVators said he thought ho could get mo an • 243
even $100,000.

He said :

AVators was not authorized to make any
such statement. I have a faint recollection
that I said something like $88,000 or $89,000,
hut to show you that I will help the thing
along, why I will recommend that wo pay
you $90,000.”

244 {Affidavit of William Fox.)

I said:

“Mr. Kennedy, you claim you are my
friend and Mr. Borst says lie is my friend,
and your Executive Committee is made up of
three people, and 1 suppose a majority vote
rules. Now, if you are in favor of giving me
$100,000, I am sure Borst is. Your third
member of the committee, who is Mr. Albert
Smith of the Vitagraph Company of America
—I feel that ho would ho inclined to pay mo a
liberal price.”

245 Ho said :

“Well, I will ring up Borst and see what
he has got to say to $100,000.”

He then asked his operator to got Mr. Borst on
the wire, and held the following conversation with
Mr. Borst:

“I have Fox in my office and he wants
$100,000 for his plant.”

He then hung up his telephone and said :

246'

“I am awfully sorry that I did not connect
you on the wire so that you could hear what
Borst said; but Borst reminded me that the
schedule figures only $78,000 and said that in
his conversation with you the other day lie
said that he was only in favor of paying you
the exact amount the schedule calls for. Of
course there is no use ringing up Smith on
this matter, because I know Smith is your
friend and Smith would bo willing to give you
$150,000 if it was left to him. In view of
Borst ’s stand in the matter, the best I would
recommend to the Committee would be $90,-

( Affidavit of William Fox.)

000, and would depend upon Smith’s support
to get you the $90,000.”

I said :

“I am awfully sorry, Mr. Keunedv. T

ooo” lkR 0 mv<! ■vo" ilt luas,; ^0l)r

Ho said :

“box, for a lellow that has got nothing to
sell, you have got more nerve than any other 248
man .1. over ran into. Have you got in mind
that tomorrow night the last film will b?
shipped to you and that you will he down and
out of the business, and that In view of this
fact we are still friendly enough with you to
give you this money?”

I said :

“Mr. Kennedy, of course that is all very
nice of you, and I appreciate it very much,
but if you say that is the host you will do,

I suppose there will ho no need of my arguing
further on the subject. Of course you have 2 .
in mind that tomorrow night, as you said,
there will bo no more films shipped to mo.

I supply so many theatres who depend upon
brand new film, what; do you recommend so
that I can got film next week?”

He said :

“Wait a minute. T forgot all about that.
In the first place, young man, I can’t, treat
with you at all until you get a license. I can’t
buy your exchange if you haven’t got a
license.”

(Affidavit of William Fox.)

u going to arrange tlmt?”

“ I will ring up Marvin, Vice-President of
the Patents Company and sue it' I can’t show
him a way to recall the cancellation of your
license. ’ ’

your business can go on the same as ever
until we take possession — the contract will
provide tlmt wo take possession as of Decem¬
ber Hth at 8 A. M.”

Ho then bad his operator got Mr. Marvin on
the telephone and said :

“lam negotiating for the purchase for the
General Film Company of the plant of the
Greater Now York Film Rental Company. I
would like to have you recall the cancellation
of their license that yon sent the Greater
New York Company on November 14th. Now,
I don’t want you to do in this case as von
have done in the People’s Film Company
case. _ There, instead of recalling the can¬
cellation you simply extended the license for
another week and when our negotiations were
not closed in that week you had to give au¬

nt you to send a notice recalling
cancellation of the Greater New York
mse, so that they have it in their possos-
n tomorrow, so that I can send them their
'tracts for the purchase of their plant on

(Affidavit of William Fox.)

^m,in, to send the letter re-
on! mg the license, you will need the votes

o! the various manufacturers. You have mv
\oto tor the General Film Company Yoii
have your vote for the Patents Company "
Mr ,ul(;i;ll0,lu openitortlmi

" ,lh t'Hofe, and you have his vote
oi the Itdison Company. Now ring up a few
o* the other manuincturors until you get the
i!8 and tolt them

in l 1 said it was all right lo recall this can¬
cellation, as we have practically closed for
the jmrclmse ot that plant.”

I have now stilted, substantially, the most im¬
portant part of the conversation which lnstod
about two hours. In the course of it Mr. Kennedy
repeatedly said that iny company was in the way
of the General Film Company and that it was a
groat trust which could not allow itself to bo ob¬
structed by mo; and a great deal more to similar
effect, which I lmve not taken time to set forth
in detail. I then left, and on the morning of
December 2nd tile plaintiff received the notice
dated December 1st, recalling the cancellation of
license, which is set forth in tho complaint.

Mr. Kennedy afterwards sent me a bill of sale
to be executed by the plaintiff to the General
Film Company and a contract between that com¬
pany and my company, providing for the trans¬
fer of tho business, including good will and lease
of the premises occupied by my company. Ho
had said on December 1st that he would send me
those papers to be examined by my counsel.

On December 7th Gustavus A. Rogers, the
plaintiff’s counsel, in my presence and hearing
telephoned Mr. Kennedy to the effect that my
company would not sell, and on the next day (De-

(Affidavit of William Fox.)

comber 8th) we received the notice of cancella¬
tion to become effective on December 25th, which
is sot forth in the complaint.

On November 21, 1911, my company received
from Patho Frcrcs a letter of which the follow¬
ing is a copy:

‘ 1 Pati ee Fni5n.Es Motion Piotuiiks
41 West 25th Street

New York, Nov. 20th, 1911.

G . N. Y. Film Co.,

New York City.

Gentlemen:

We have been advised by the Motion Pic¬
ture Patents Company that your License
Agreement with the said concern will ter¬
minate on Monday, Dec. 4th.

We have therefore been instructed to dis¬
continue delivery of films to you on or after
the above date.

Wo regret very much that, wo have to dis¬
continue business relations with you in this

Wishing you the best success and thanking
you for past favors, we bog to remain,
Yours very truly,

Paths Fheiies,

Per M. Ramirez Tones.”

For the reasons set forth in the complaint it
will bo impossible for the plaintiff to carry on
its business if its license should be cancelled or
the supply of films cut off by the licensed manu¬
facturers or the regularity and promptness of
the service in any wise interfered with.

The principal customers of the plaintiff are
ten of the largest, best equipped and best pat¬
ronized theatres in the Boroughs r.f Manhattan

(Affidavit of William Fox.)

and Brooklyn, City of New York, devoted to the
exhibition of motion pictures. I am familiar with
the management and conduct of these theatres
and interested in them, and have had frequent
opportunity of observing the character of the pic¬
tures displayed thereat. Since the formation of
the Motion Picture Patents Company and the ex¬
ecution ot the exchange license agreement, Ex¬
hibit A, .every and all of the theatres aforesaid

manufacturers exclusively. Some of the theatres
have come into existence since that time, but im- 260
mediately upon the opening of the theatre and to
the date hereof no other pictures have boon shown
therein excepting those of the licensed manufact¬
urers; and the effect of disconli lining the use of
the licensed film in any of the houses and par¬
ticularly in the now theatres would bo not only to
destroy thy. effect of months of advertising in the
new theatres and several years of advertising in
the older theatres, but the result would be ruinous
to the theatres. r~am the nmnaging olIimr_»£ \ ^

every and all of the theatres and entirely familiar V"""
witlf the perftjrmandcsj'Miil upon my own knowl-
odge-oftliF'nioatroi'Ti'nd the conditions thereat,

I state that if the licensed manufacturers refuse
to or cannot bo compelled to or will not bo com¬
pelled to deliver the licensed film to the plaintiff
so that the theatres aforesaid may lease the li¬
censed film, that it will he absolutely necessary
for all of these theatres to cease their business
relations with the plaintiff and to get the licensed
film from the defendant jJenqral Film Company;
so that the situation will he that-thejfiaintiff will
lose the best and most profitable patrons that it

( Affidavit of William Fox.)

its customers to the General Film Company and
it would be impossible to get them back.

The film produced by the independent manu¬
facturers referred to in the complaint, is for the
reasons there staled not capable at this time of
substitution for the licensed ‘ilm. It lias not the
same runge of subjects and is not produced in
us large quantities as the licensed film, and it is
impossible for any ugonoy or exhibitor using li¬
censed film to use in connection therewith any
unlicensed film. That would be a violation of the
license agreement, and the use of such independ¬
ent film would also make the plaintiff and its eus- '
toiners liable to suit by the Patents Company for
infringement of. patents. The Patents Company
lias brought a number of such suits against ex¬
hibitors. There have been instances where li¬
censed limnutucturors having discovered unli¬
censed film in a motion picture theatre, have
promptly replevied the licensed film and there¬
upon the Patents Company lias cancelled the li¬
cense of the exhibitor.

The value of the plaintiff’s business and good
will, so long as its license continues in existence,
is from $600,000 to $750,000, and the plaintiff
from October 1, 1010 to October 1, 1911 earned in
its business between $60,000 and $75,000. If
ito license should bo cancelled, its business and
good will would be destroyed and become worth¬
less and it could not sell its plant for more than
the value of the fixtures.

Referring ;.to the accompanying affidavit of
William H. Swanson, I was present at the meet¬
ing of representatives of the rental exchanges in
January, 1909 when the license agreement, like
Exhibit A, was brought to our attention, and we

268 (Affidavit of William Fox.)

were informed that we must accept it and do busi¬
ness according to its conditions. As stated in Mr.
Swanson’s affidavit, a committee of representa¬
tives of the rental agencies was appointed to con¬
fer with the representatives of the Patents Com¬
pany and the licensed manufacturers, and that
/ committee, of which Mr. Swanson was chairman,
reported back to us that no change in the agree¬
ment could be obtained, but that the Patents Com¬
pany and the licensed manufacturers informed
our committee that the license was good for the
unoxpired term of the patent under which we were
to he licensed, that is reissue letters patent 12192,
and that no license could be cancelled except for
violation of its conditions and after a full hearing.

On or about January 20, 1909, which is the date
of the plaintiff’s license, I had a conversation with
Dwight Macdonald who was General Manager of
the Patents Company, upon this subject. I tele¬
phoned him and said that I had the contract on
my desk but had not signed it and wanted to bo
sure of where my company would stand and how
long the contract was good for. lie said, in sub-
2 yQ stance, that I had overheard the discussion at the
meeting and heard Swanson ’s report that the li¬
cense was good for the unoxpired term of the
patent, and that I might be perfectly sure I would
not lose the license so long as the patent was in
force unless I violated the terms of the license.

William Fox.

Sworn to before me this )

16th day of December, 1911. \

Raphael Bmll,

Notary Public No. 109,

New York County,

SUPREME COURT,

New Yobic County.

Gbeateii New York Fiwi Ren.
tal Company,

Plaintiff,

against

Motion Picture Patents Com¬
pany and others,
Defendants.

State and County ok New York, ss:

Corns Roskndluii, being duly sworn, says:

I mn, and have boon since its organization,
Manager of the plaintiff in this action.

I am familiar with the moving picture business
in its various branches, and particularly with the
business formerly conducted by rental agencies
like the plaintiff.

Before December, 1908, there were' 123 rental
agencies carrying on business throughout the
United States. After the organization of the
Patents Company and the combination effected
with the licensed manufacturers, the number was
reduced to 72 rental agencies, which wore licens¬
ed by the Patents Company under license agree¬
ments in all respects similar to the one issued to
the plaintiff, Exhibit A attached to the complaint.

Nino of the 72 licensed agencies were located in
the Borough of Manhattan, City of New York.
The only one of the 72 licensed agencies now re-

74 (Affidavit of Louis Rosenblttli.)

maining in business is the plaintiff in this action,
I know the fact from my acquaintance with the
trade, and, besides that, the information was
given mo by P. L. Waters, manager of the Gen¬
eral Film Company, in a conversation had with
him at his office about the middle of November,
1911.

That conversation was a sequel to a conversa¬
tion I had with Mr. Waters at his office about
throe months earlier, when I called upon him in
response to a telephone invitation from him.

75 Mr. Waters talked with me in a general way
about the sale of the business of the plaintiff to
the General Film Company. Ho said he thought
it would bo advisable for the plaintiff to sell, and
that he did not see how it would be possible for
it to continue in business in competition with the
General Film Company. He said that the
Greater New York Film Rental Company was
the only licensed rental agency in the United
States, except the General Film Company and
one concern in the West. Ho instanced his own
experience as owner of the P. L. Waters Ex-

-6 change in this City with the General Filin Com¬
pany. 1-Ie sold that business about July, 1910, to
the General Film Company, and said to me that
if ho could be assured of a license from the Pat¬
ents Company and that it would not be cancelled,
he would gladly repay all the money ho had re¬
ceived for the sale of his business and pay $100,-
000 additional for the privilege of carrying on a
rental exchange in this City.

At the second conversation with Mr. Waters,
which was upon the same general subject, he told
mo that the western concern was no longer a li¬
censed exchange, thus leaving the General Film

(Affidavit of Louis Rosanbluh.)

Company in solo possession of the field in the
United States, with the exception of the plaintiff
in this action.

On or about November 29, 1911, 1 had a con¬
versation with Mr. J, A. Hurst, a director of the
doloudant Patlie Freres and treasurer of the de¬
fendant General Film Company. I wont to Mr.
Burst’s office for the purpose of arranging a
meeting between him and Mr. William Fox, Pres¬
ident of the plaintiff, which I did arrange for that
afternoon.

I asked Mr. Borst why the plaintiff’s license
had been cancelled, and be said that the Greater
Now York Film Rental Company was the only
licensed rcntnl agency remaining in business, ex¬
cept the General Film Company, and it was neces¬
sary to got our concern out of the way. Ho said
that the managers of the various branch offices
of the General Film Company reported to him,
through officers of the Company, when asked why
they could not got prices for film from exhibitors,
that it was impossible so long as the Greater Now
York Film Rental Company was in the field, be¬
cause, whenever the General Film Company ex¬
pressed an intention to increase the rentals to
exhibitors, the latter replied that they would get
their film from the Greater Now York Film
Rental Company, which had not increased its
prices, and that some of the customers of the
General Film Company had already gone over to
our concern.

The plaintiff never solicited the patronage of
any customers of the General Film Company, but
has lost customers to the General Filin Company,
which has been actively soliciting the trade, and
has been cutting prices and renting films below
the prices charged by the plaintiff.

2 So (Affidavit of Louis Rosenbluh.) ,

As much ns throe or four weeks before Novem¬
ber 14, 1911, the date of the first notieo of can-
cellnlion of the plaintiff’s license, rumors wore
widespread through the trade in Now fork that
the plaintiff would soon lose its license and ho
compelled to retire from business. Frequent re¬
ports came to mo from exhibitors, who were
doing business with the plaintiff, that such state¬
ments had been made by a representative of the
General Film Company, and many of our custom¬
ers inquired whether the statement was true.

281 Ever since the organization of the plaintiff, it
has had standing orders with every one of the
licensed manufacturers (so designated in the
complaint) for the entire output of films of each
of such manufacturers, except that occasionally
such an order would he cancelled when the pro¬
duct of a particular manufacturer for a time fell
below the standard and proved unsatisfactory to
exhibitors.

Since the combination made in the latter part
of 1908 or the beginning of 1909, the plaintiff has
continued to keep standing orders with each of
said licensed manufacturers for the entire output
2®2 of such manufacturers, and has paid the rental
fixed by the plaintiff’s license agreement, which
is eleven cents per running foot, subject to a
rebate of 10 per cent, as provided in said license.

During the period of competition among the
manufacturers preceding the aforesaid combina¬
tion, greater enterprise was displayed by the
manufacturers in obtaining and depicting new
scones and subjects than they have shown since
the combination; the plaintiff and other rental
agencies existing during the period of competi¬
tion bought the films outright, paying therefor

( Affidavit of Louis Rosenbluh.) 283

less than since the combination has been exacting
for the films in the way of rental; the plaintiff
ami other rental agencies, before the combination,
wore able to make more extensive and profitable
use of the films, first, because being the owners
thereof they could run them indefinitely in mov¬
ing picture shows so long as exhibitors could bo
found who were willing to use the films, and in¬
asmuch as new exhibitors and new show places
wore constantly springing into existence in places
where moving pictures wore a novelty, the films
could bo kept in service for as long a period as 284
two years, and in fact until they were physically
worn out and useless; and, secondly, the rental
agencies wore not confined to leasing films to ex¬
hibitors licensed by anybody, and thus wore free
and unhampered in carrying 011 their business.

Since the combination, as appears from the li¬
cense agreement, Exhibit A, the period during
which a rental agency can use the films is limited,
and they may bo leased only to licensed exhibitors.

In addition, there is, and always has boon, since
the combination, constant danger of cancellation
of a license owing to dishonesty of a licensed ex¬
hibitor who may yield to the temptation to pass 2
films on to some unlicensed exhibitor, and there
has frequently boon more than a suspicion in the
trade that such occurrences have been instigated
by the Patents Company to afford an excuse for
cancelling licenses. Owing to such risk in putting
films into the hands of licensed exhibitors, it has
been necessary for the plaintiff to restrict its ac¬
tivities, and it has in fact reduced its business out¬
side of the City of New York so that it eoukl keep
close watch of the exhibitors to whom it leased
films. It has also been necessary for the plain-

96 •• '

2gg (Affidavit of Louis liosunbhih .)

(iff to go to the expense of employing inspectors
to visit the shows given by licensed exhibitors
dealing with the plaintiff, to make sure that there
was no violation of the terms upon which the
films were leased or of the conditions of tiio plnin-
tiif’s licenso.

Before .January, 1909, the prices of Him sold
by the various manufacturers varied, some being
sold as low as 7>/o cents per running foot. After
the combination, the prices charged by all the li¬
censed manufacturers wore the same, and higher
2S7 than the average prices before prevailing.

The plaintiff has been obliged to reduce, und
has reduced, the territorial extent of its business
for the reasons mentioned.

The plaintiff has a largo investment in its
plant und business, and has built up a valuuble
good-will, which is day by day increasing in
value, and it has made and is making large profits
from its business. If its license wore cancelled,
and its supply of films cut off, or the promptness
and regularity of the supply in any wise impaired,
the plaintiff’s business would be ruined.

Its business requires it to rocoivo from each of
288 the licensed manufacturers the entire output of
such manufacture as fast as the fdms are ready
for the market. The essence of' the rental ex¬
change business lies in the ability of the rental
agency to furnish new films, i. e., films containing
new scenes and subjects — to exhibitors weekly, in¬
sufficient quantity to give them a variety of choice,
and for that reason the plaintiff has always main¬
tained standing orders for the entire output of
all said manufacturers, and has thus far been
served promptly and regularly and without dis¬
crimination.

(Affidavit of Louis Rosenbluh.)

The films are designated as “runs,” according
to the dates on which they are leased to exhibit¬
ors. The plaintiff usually bought from the li¬
censed manufacturers 86 reels of film per week,
and has latterly bought from them 38 reels per
week. Each retd contains a new scone or subject,
and a release date is designated for each reel on
which dale it may bo leased to exhibitors. Film
supplied on the release date is known as the “first
run”; that supplied on the next day is known us
the “second run,” and so on. The plaintiff has
customers who take “first run” together with
subsequent ‘runs,” and other customers that
always take later than “first runs.” Those that
make a practice of showing “first run” film would
not deal with the plaintiff unless they wore
promptly supplied with the “first run,’’ and if
such film should, by means of any delay, be sup¬
plied by the plaintiff after the release date, it
would not bo serviceable as “first run” film, be¬
cause other exhibitors obtaining their supply
through the General Film Company would already
have shown the same subjects on an earlier date.
In all large cities, and particularly in New York,
the freshness of the supply of film is of prime im¬
portance, and it would be impossible for the plain¬
tiff to supply its best customers if it were not
regularly and promptly furnished with all the
new scenes and subjects put out by the licensed
manufacturers.

Lours Rosr.xm.un.
Sworn to before me this)

16th day of December, 191J.J
David Davis,

Notary Public,

Kings County, No. 83.

Certificate filed in N. Y. County.

Registers No. Kings Co. 4346. N. Y. County
2181.

t. __ . t i

SUPREME COURT OP THE STATE OF NEW

YORK.

Cheater New York Film Rental
Company,

Plaintiff,

against

Motion Picture Patents Com¬
pany and OtllOl'S,

Defendants.

State and County op New York — ss:

William II. Swanson, being duly sworn, says:

1. I reside in C'hicugo, Cook County, Illinois.
In the year 1906 I formed the firm of William H.
Swanson & Company at No. 79 Clark Street,
Chicago, Illinois, I engaged in the business of pur¬
chasing motion picture film and projecting nm-
chinos and leased the films and machines to ex¬
hibitors on a weekly rental basis. In 1907 I form¬
ed and organized a corporation under the laws
of the State of Illinois, known as the William II.
Swanson Dixie Film Company, and established
a similar business at New Orleans, La. In the
same year I organized and incorporated a cor¬
poration known as the William II. Swanson St.
Louis Film Company, doing a similar business at
St. Louis, Mo. The following year I personally
established the William II. Swanson Kansas City
Film Company, doing a similar business in

{Affidavit of William II. Swanson.)

Kansas City, Mo. The same year I per¬
sonally established the William II. Swanson
Omaha Film Company at Omaha, Nebraska, doing
a similar business. I continued to conduct all of
the foregoing establishments until the latter part
of 1908. During all of this time I purchased mo¬
tion picture films from all of the following con¬
cerns: American Mutoscope & Biograph Com¬
pany, Edison Manufacturing Company, Essanay
Company, Kalem Company, George Kloine, Lubin
Manufacturing Company, Pathe Froros, Selig
Polyscope Company, and Vitagruph Company of
America, and from several of them I purchased
projecting machines. The film that I purchased
was mine, and I paid for same, and, as I have
heretofore described, in turn I leased the film to -
exhibitors. Up to the year 1908 I lmd established
a largo business, the not profits of which wCre at
least $lQ0^000_a year. The markot-was open. I
was pernutteiTtd'bujnilm wherever I chose to buy
it. The manufacturers were competing with each
other and selling goods only on quality, without
regard to standing order. By that I mean that I
was not obliged to give any specified order — any
continuous number of regular releases which could
not be discontinued by means of a two weeks
notice given in advance of the next coming release

'///

V4y‘"

(a) I will hereafter show that after the forma¬
tion of the combination of the manufacturers and
the organization of the Motion Picture Patents
Company the course of dealings changed entirely :
instead of it being a purchase arrangement, I and
the other agencies wore only permitted to lease
film and not to purchase and could not purchase

101

100

2g8 (Affidavit of William II. Swanson.)

but wore obliged to take what the manufacturers
saw fit to give us, and that the quality of film was
to bo determined absolutely by the manufacturers.

II. — Prior to January, 1009 the licensed man¬
ufacturers, to wit : American Mutoscope nnd Bio¬
graph Company, Edison Manufacturing Com¬
pany , Essanny Company, Kaloin Company,
George Kleine, Lubin Manufacturing Company,
Patlio Frores, Solig Polyscope Company, and
Vitagraph Company of America, had combined,

299 and the Motion Picture Patents Company was
formed in the latter part of 1008 or in the early
part of 1009.

(n) Thereupon, at the request of the licensed
manufacturers a meeting of the representatives
of all of the film rental exchanges in the United
States was called while in session at the Imperial
Hotel, Borough of Manhattan, City of New York,
on or about January 12, 1000. At this meeting
there were representatives of about, one hundred
film rental exchanges. I attended this meeting
as a representative of the following concerns in

-*00 which I was interested either ns the sole owner
or as the majority stockholder; William II. Swan¬
son & Company, of Chicago, Illinois; William II.
Swanson Dixie Film Company; William II. Swan¬
son St. Louis Film Company; William II. Swan¬
son Kansas City Film Company; and William II.
Swanson Omaha' Film Company.

III. — At that meeting the representatives of
the film exchanges wore informed by the manu¬
facturers that the latter had formed the Motion
Picture Patents Company and that it had li-

(Affidavil of William II. Swanson.) 30I

consod the manufacture of films and that there¬
after the licensed manufacturers would only deal
with such of the film exchanges as should bo li¬
censed by the Motion Picture Patents Company;

(a) That no films would be sold but that films
would only be leased to the licensed exchanges
under the terms of an agreement which they had
prepared for signatures of such exchanges as they
hud determined to license. They also stated that
they had concluded not to license all of the ex¬
isting ugoncios, but that some of the agencies 302
would not ho licensed. The fact is that a number
of the exchanges were refused a license.

(h) It was also stated that the licensed rental
agencies would only be supplied with leased films
as long as they continued to hold the license of
the Motion Picture Patents Company, and no
longor, and that the licensed rental exchanges
would only sublease the film to such exhibitors
as would bo licensed by the Motion Picture Pat¬
ents Company and none others, nnd that for each
projecting machine upon which the film was
shown a license fee of two dollars per week must 3°3
he paid to the Motion Picture Patents Company.

(0) It was also stated that no licensed film
rental agency should purchase, lease or deal in
any other film excepting the film leased from the
licensed manufacturers, and that no licensed ex¬
hibitor would be permitted to show or exhibit any
film excepting the leased films of the licensed
manufacturers, and that the agencies must return ■
within a specified time the film which they had
purchased and take in exchange leased film for

102 '

io:s

304 (Affidavit of William II. Swanson.)

which they wore to pay the leased price. Before
the close of the mooting there was road to tire
representatives of tire iilm rental exchanges a
printed form of exchange license agreement sim¬
ilar in form to the exchange license agreement
between the Motion Picture Patents Company and
the Greater Now York Film Bontal Company, an¬
nexed to the complaint in this action, marked
Exhibit A.

IV.— After the announcement was made, and

305 the reading of the agreement referred to in the
preceding paragraph, the representatives of the
manufacturers stated that that was the only form
of agreement that would bo accepted by the Mo¬
tion Picture Patents Company, without modifi¬
cation, and that any film rental exchange that
refused to sign the agreement would not be sup¬
plied with film. Printed copies of the agreement
wore circulated among the representatives at the
meeting, and they were informed that the Com¬
mittee of the manufacturers was waiting in an
adjoining room to get the sense of the mooting.
All of the representatives of the film rental ox-

306 changes protested against signing the agreement
and to the request for a compliance on their part
with the conditions contained in it.

(a) As the result of the unanimous protest of
the representatives of the film rental exchanges
a committee was appointed of which I was the
chairman. This committee waited on the commit¬
tee of the Motion Picture Patents Company and
the licensed manufacturers consisting of Frank h.
Dyer of the Edison Company, H. N. Marvin of the
American Mutoscope & Biograph Company and

(Affidavit of William II. Swanson.) 307

Mr. George T. Scull, at No. 10 Fifth Avenue, Bor¬
ough of Manhattan, Now York City, which was at
the time the headquarters of the Motion Picture
Patents Company and which at that time was the
headquaiteis of the Edison Manufacturing Com¬
pany the aforesaid three having been repre¬
sented as being the Executive Committee of the
Motion Picture Patents Company. I stated, as
the chairman of our committee, that the meeting
of the representatives of the film rental exchanges
had takun an adjournment and had postponed'
action, because there was a unanimity against 3°8
signing the agreement, and that on behalf of the
representatives oi the film rental exchanges our
oommitteo was directed to say to the Motion Pic¬
ture Patents Company and licensed manufac¬
turers, that the agreement was harsh and arbi¬
trary and should not be exacted. Mr. Dvor said
that if the rental exchanges did not want to sign
the agreement they did not have to. I thereupon
asked Mr. Dyer whether if we did not sign it the
licensed manufacturers would supply us with
film. Ho said they certainly would liot, that he
had already stated to us, and repeated, that no 309
one could buy any film at all, and that the li¬
censed manufacturers would not lease the film ex¬
cepting to such exchanges as were licensed and
had signed the agreement. I then stated that if
wo did not sign the agreement and get a license
and they would not lease films to us, that the ex¬
changes would have to go out of business. Mr.^*^^"
Dyer said that was up to us. I then usked him
how long wo wore to bo bound by this agreement —
how long this agreement was to bo for; that they
did not mention any specific time in the agree-

3io

(Affidavit of William II. Swanson.)

raent, nnd still tliey said in it that they could can¬
cel it at any time with or without cause. Mr. Dyer
said that the license agreement was for the life
of the patent and that unless it was cancelled in
the manner provided in the agreement it would
continue through the life of the patent. I then
asked him how the agreement was going to con¬
tinue through the life of the patent when they did
not say in the agreement that it might bo cancelled
only “for cause,” and requested him to insert a
provision in the agreement that it could he can-
3 1 1 celled only for cause. He said that we could rest
assured that no man’s license would he taken from
him unless it was for cause and that if he lived up
to the terms of the agreement it would continue
throughout the life of the patent, nnd that if there
were any violations of the agreement assorted
that the man would have a fair and full opportun¬
ity of making explanations before his license was
taken away. I thereupon became insistent that
there were other things in the agreement that re¬
quired change, and Mr. Dyer became impatient
and said that the agreement had been prepared
in that form for signature by everybody and not
3 a word in it would he changed and it must be
taken in that way or not at all.

V. — The committee made a report to the meet¬
ing of the representatives of the film exchanges,
and discussion was had as to a way or moans of
obtaining film other than through the licensed
manufacturers, and it was the unanimous sense
of the meeting, after a full discussion, that there
was no way in existence or that could he devised,
of getting American film, excepting through the

105

(Affidavit of William II. Swanson.) 3I3

licensed manufacturers, and that the only foreign
film that was commercially of use was that of the
Patho Frorcs Company which had also joined the
licensed manufacturers.

(a) "With respect to the fact of obtaining film
I state that at the time of the formation of the
combination there were absolutely no manufac¬
turers in the United States or Canada manufac¬
turing film, and that there was no source of sup¬
ply in America except through the licensed manu¬
facturers; that all the foreign film manufacturers 3*4 ■
whoso product was obtainable and had com¬
mercial value for us, were controlled by Pathe
Frorcs a manufacturer which lmd joined the
ranks of the licensed manufacturers and was one

of them, and a few concurns the output of which
was controlled by George Klcinc, referred to in
the license agreement as a licensed manufacturer,
nnd who had joined the ranks of the licensed
manufacturers, and ulso the supply of George
Molios who had joined the ranks of the licensed
manufacturers.

(b) The fact is that the demand since 1909 has 3 5
been for the film of American manufacture to

the practical exclusion of the foreign made film,
and that the ratio is about seven American films
to one foreign film.

VI. — The representatives of the film exchanges,
confronted with this situation and considering
Hint the}' wore forced to sign the agreement or
abandon their business, with the exception of the
representatives of two concerns, expressed a will-

106

Jl6 ( Affidavit of William II. Swanson.)

ingnoss to accept the agreement, and I am in¬
formed, that with the exception of those two con¬
cerns, that all of the agencies tlmt the Motion
Picture Patents Company was willing to license,
thereafter executed the agreement— the total
number of which I am informed and believe, is
approximately seventy-five — and as to those two
concerns, to wit: Chicago Film Exchange, of
Chicago, Ill., and the Globe Film Exchange, of
Chicago, Ill., both of which had a number of
branches throughout the United States, they were

3 1 7 practically driven out of business and wore com¬
pelled to abandon their branches and the busi¬
ness of the main offices dwindled to almost noth¬
ing.

VII— It was stated by Mr. Dwight Macdonald,
that lie was acting as the general manager for the
Motion Picture Patents Company, and that state¬
ment was likewise made by the representatives
of the Motion Picture Patents Company and the
licensed manufacturers, and the representatives
of the various exchanges were directed tlint all
future dealings beginning with the signing of the

3 1 8 agreements and thereafter, should be had with
Mr Macdonald. The fact is that Mr. Macdonald
was the general manager of the Motion Picture
Patents Company, and I have seen a number of
agreements that have been executor by Mr. Mac¬
donald as the general manager of the Motion
Picture Patents Cmpany. After I had express¬
ed a willingness to accept and execute exchange
license agreements for the various places in
which I or my companies were interested, ns
hereinbefore described in paragraph I, of this
affidavit, there was delivered to me a form of

107

( Affidavit of William II. Swanson.)

license exchange agreement for each place ex¬
cepting the one at Now Orleans, La. I executed
the agreements and sent them to the Motion Pic¬
ture Patents Company by mail to No. 10 Fifth
Avenue, Borough of Manhattan, Now York City,
but they were never returned- to me and I never
received executed agreements, Several com¬
munications I sent to the Motion Picture Patents
Company received scant attention.

(a) I was supplied with leased film, however,

for loss than two months, and in February, 1900, 320

I was notified that I would not got any more film,
and all of the exhibitors to whom I rented receiv¬
ed a notice from the Motion Picture Patents
Company that I was not licensed to rent films and
that they wore prohibited from taking service
from 1110 und that they must take service from
one of the licensed rental exchanges.

(b) I have not been supplied with any films
from February, 1909, to the date hereof, by any
of the licensed manufacturers, and I was unable
to get any film elsewhere.

321

(e) After receiving the notice from the Motion
Picture Patents Company, and having been noti¬
fied by the exhibitors to whom I had rented film,
that they were instructed by the Motion Picture
Patents Company to discontinue renting from 1110
I went to Mr. George Kloino, Mr. William Selig
of the Selig Polyscope Company, Mr. George
Spoor of the Essanay Company, Mr. John Har¬
den, a representative of the Edison Manufacturing
Company at Chicago, Mr. John Bock, the Chicago
representative of the Vitngraph Company of

108

322 ( Affidavit of William II. Swanson.)

America (who is the son of Mr. William Rock,
the President of that Company), Mr. William
Wright, the Chicago representative of the Kalem
Company, and Mr. Montague, the Chicngo repre¬
sentative of the Pathe Freres Company, all of
whom wore the men that I had previously dealt
with in the course of my business with the various
companies which they represented, and I request¬
ed that the orders that I had for film be filled,
stating that it was destructive to my business if
they did not fill the orders. I was informed by

323 each and all of them that they had instructions
from the Motion Picture Patents Company not
to ship me any film, that under the arrangement
they were not permitted to ship any film to me
and that they would not ship any.

(d) I tried to do business with the films that I
had on hand, hut I was unable to do so on ac¬
count of the wide publicity which was given by
the Motion Picture Patents Company to the fact
that I had no license to rent film, and further, it
was a matter of common knowledge that where
films were shown by exhibitors that did not come

324 from licensed agencies, that the licensed manu¬
facturers by writs of replevin and other court
proceedings during the course of the exhibitor’s
performance seized the films that were being
shown, carried them away and broke up the per¬
formance. Some of the exhibitors expressed
themselves to me to the effect that if they handled
my film they would he subject to these suits in
replevin and court proceedings and also damages
and they did not want to become involved and con¬
sequently went elsewhere to got their films. For
a period of several months my business was at a

10!)

( Affidavit of William II. Swanson.) 325

practical stand-still — so much so that the receipts
of the agencies immediately dropped from a not
profit of $3,000 a week to a not loss, finally re¬
sulting in my being compelled to discontinue all
of the agencies. I had a cash capital of $100,000
or more in addition to the stock of films I had on
hand and the assets and good will of my business
which were worth $750,000.

(0) So that while at the time when the Motion
Picture Patents Company was formed and the
combination was made with the licensed manu- 326
facturers 1 had a plant the assets and good will
of which were worth $750,000 over the liabilities,
before the close of the year 1909 my capital was
gone and my places since wiped out of existence.

For a period of about throe years prior to 1909
the net profits annually of my business averaged
about $75,000 a year. After the refusal to ship
there wore no profits, and, in fact, in my attempt
to carry 011 business I lost all I had and was wiped
out as I have heretofore explained.

VIII.— Before January, 1909, the prices at
which I purchased film wore less than the soiled-
ule fixed under the exchange license agreement.

J.'he highest price I over paid for film was twelve
cents a foot, to the Edison Company, and not
more than ten cents a foot to any of the other
manufacturers, and to most of the manufacturers
less than ten cents a foot— some of them seven
and one-half cents a foot, depending 011 the quant¬
ity purchased — and of the same quality, kind and
run as in the schedule of the exchange license
agreement was to be leased to the rental ex¬
changes at thirteen, eleven and nine cents a foot,

1 .... i

328 {Affidavit of William II. Stvanson.)

so that the prices at which the films were to he
leased from the licensed manufacturers wore
greatly in excess of the prices at which I had previ¬
ously purchased the, films. Directly after the for¬
mation of the Motion Picture Patents Company I
was notified by the various projecting machino
manufacturers that the minimum price for a pro¬
jecting machino would he raised from Ninety-five
dollars and One hundred dollars, which were the
then prevailing prices, to One hundred and fifty-
five dollars, and in some instances to Two hundred

329 and twenty-five dollars. This rise of price by the
projecting machine manufacturers, I am informed,
was accomplished by a combination between the
projecting machine manufacturers and the Motion
Picture Patents Company, under which the man¬
ufacturers paid a royalty of Five dollars on each
machine, and the concerns which wore manufac¬
turing the machines were licensed by the Motion
Picture Patents Company or driven out of busi¬
ness, as no exhibitor under a license exchange
agreement was permitted to exhibit films on any
but licensed machines, and every machine was re¬
quired to have attached a label to the effect that

330 it was duly licensed by the Motion Picture Pat¬
ents Company.

William II. Swanson.

Sworn to before me this 15th?
day of December, 1911. j
Louis Cohen,

Notary Public, No. 54,

N. Y. County.

Ill

SUPREME COURT,

against

Motion Pictuhe Patents Com¬
pany and others,

Defendants.

State and County op New Yoiik — ss:

James J. Lodge, being duly sworn, says :

I live in Chicago, Illinois, and am Vice-Presi¬
dent and General Mannger of George Melios
Manufacturing Company, a corporation organized
under the laws of the State of Illinois, and carry¬
ing on business in Chicago.

The defendant Melios Manufacturing Company
is a Now York corporation, formed about July,
1910, by Gaston Melios, who was and still is Presi¬
dent of the George Melios Manufacturing Com¬
pany. He offered his resignation as such Presi¬
dent, but our Company refused to accept it.

Said Gaston Melios and his son, Paul Melies,
who was an employe of our Company, left that
Company in the summer of 1910, induced, as I
have always believed, by the Motion Picture Pat¬
ents Company and others, and organized the
Melies Manufacturing Company.

334

(Affidavit of James J. Lodge.)

My company, tlic George Holies Manufactur¬
ing Company, was one of the original “licensed
manufacturers” under license granted by the
Motion Picture Patents Company in or about
December, 1908.

Such a license was signed by the Patents Com¬
pany and by myself in behalf of my company, and
nothing remained but to attach the seal of the
Patents Company. The license was left with
Prank L. Dyer, President of the Patents Com¬
pany, for the purpose of having the seal of his
335 company attached and on his promise to have the
seal attached and forwarded to me in Chicago.
The license never was forwarded to me, and I saw
such license, for the first time since its execution,
about 12 months ago, in the course of talcing testi¬
mony in a suit brought by my company against
the Motion Pitouro Patents Company to compel
the Motion Picture Patents Company to deliver
the license and specifically perform its undertak¬
ings therein. That suit is ponding in the United
States Circuit Court for the District of New
Jersey.

The licenses granted by the Patents Company
33^ to the so-called licensed manufacturers wore
identical in terms. One of the provisions of each
of those license agreements was that the licensed
manufacturer covenanted not to supply film to
any film rental agency which was not licensed by
the Motion Picture Patents Company. It was
agreed among all the licensed manufacturers and
the Patents Company, at the time when the license
agreements were made, that the licensed manu¬
facturers wore under obligation to and would fur¬
nish the film manufactured by them, respectively,
to all film rental agencies in the United States

(Affidavit of James J. Lodge.)

that wore licensed or should be licensed by the
Motion Pioturo Patents Company. This was a
frequent subject of discussion at mootings of the
licensed manufacturers with officers of the Motion
Picture Patents Company. One or more officers
of the Patents Company, usually Mr. Frank L.
Dyer, the President, or Mr. Marvin, the Vice-
President, or Mr. Kennedy, the Treasurer, were
almost always present at meetings of the manu¬
facturers.

The agreement and obligation of the licensed
manufacturers to furnish film to all licensed film
rental agencies was just as distinot and well un¬
derstood as their written obligation in their li¬
cense agreements not to furnish their film to any
rental agency that wTas not licensed by the Pat¬
ents Company.

Immediately after, as I understood, my com¬
pany had been licensed by the Patents Company,
it received from the Patents Company a list of
licensed rental agencies, with instructions to sup¬
ply film to no other agencies, and from time to
time thereafter received revised lists showing
changes in the licensed rental agencies, some of
the licensed agencies having been eliminated, and
our instructions were not to supply any film to
such agency whoso license had been cancelled.

For a considerable time before the formation of
the General Film Company, the project of organ¬
izing such a company for the purpose of control¬
ling the business of supplying films to licensed ex¬
hibitors was discussed at meetings of the licensed
manufacturers and the Patents Company, and it
was agreed that such a corporation should bo
formed for that purpose, and that the licensed
film rental agencies throughout the United States

338

1 _ l I

340 (Affidavit of James J. Lodge.)

should bo absorbed by the now corporation to bo
composed of or controlled by the licensed manu¬
facturers..

The General Film Company was accordingly
organized under the laws of tho.Stato of Maine
in the spring of 1910, and my information is that
it lias absorbed or eliminated every film rental
agency in the United States, except the Greater
New York Film Rental Company.

At meetings of the licensed manufacturers and
the Patents Company preceding the formation

341 of the General Film Company, it was stated that
every licensed manufacturer would have the
privilege of becoming a subscriber for stock of
the General Film Company, and my understand¬
ing is that every one of the licensed manufactur¬
ers, except perhaps the Melies Manufacturing
Company, did acquire stock in the General Film
Company, either in its own name or in the name
of some officer. The understanding was that the
licensed manufacturers were to share equally in
the stock of the General Film ' Company. The
officers and directors of the General Film Com¬
pany, since its organization, have been made up

34 2 of officers or directors or, representatives of the
licensed manufacturers, and the General Film
Company, ever since its organization, has been
and still is completely controlled by the licensed
manufacturers, and is simply the licensed man¬
ufacturers in a single corporate form. I do not
know whether the Patents Company actually
owns or controls any stock in the General Film
Company, but the relations between that Com¬
pany and the General Film Company, and, in¬
deed, among the Patents Company, the licensed
manufacturers and the General Film Company,

( Affidavit of James J. Lodge.) 343

is of the closest character, and they constitute a
single control and are practically a single organ¬
ization.

The talk bad over and over again at mootings
of the licensed manufacturers and the Motion
Picture Patents Company was to the effect that
the film rental agencies and the exhibitors were
making a disproportionate profit out of their bus¬
iness and realizing more proportionately than the
manufacturers, and flint that was a condition
which must bo remedied by getting control of the
supply of film into the bands of the manufactur- 344
ors and the Patents Company by moans of the or¬
ganization of such corporation as the General
Film Company, and that such corporation when
organized would bo in position to cliango the
rates for supplying film and exact a rental in
proportion to the profits made by the various ex¬
hibitors.

From the time when the combination between
the Patents Company and the licensed manufac¬
turers was first made in December, 1908, the in¬
tention 1ms been unswervingly to obtain the ex¬
clusive control of and, so far as possible, monopo¬
lize every branch of the motion picture business, 345
including the manufacture of the cameras with
which the pictures are taken, the taking of mov¬
ing pictures upon the negative films, the transfor-
renee thereof to the positive films, the manufac¬
ture of the projecting machines, and the supply¬
ing of films to exhibitors.

The royally of $2 per licensed machine per week
to be paid by licensed exhibitors, as provided in
the license given by the Patents Company to the
film rental agencies, was, by agreement between
the licensed manufacturers and the Patents Com-

llfi

( Affidavit of James J. Lodge.)

puny, divided as follows : A percentage — I do not
remember whether it was 14 per cent, or 24 per
cent. — was divided among all the licensed manu¬
facturers in proportion to the quantity of nega¬
tive film produced by them respectively ; tlio bal¬
ance of the fund was to bo, and, to the best of my
knowledge, was, turned over to the Patents Com¬
pany for the payment of legal expenses involved
in bringing and defending numerous litigations
over patents and arising out of the various stops
and proceedings taken by the Patents Company to
, . - secure control of the situation.

The officers of the Patents Company, and par¬
ticularly Mr. Dyer and Mr. Kennedy, repeatedly
assured the licensed manufacturers that it was
only a question of time when the Patents Company
would control the whole situation, which would
accrue to the benefit of all the manufacturers.

The projecting machines upon which the above-
mentioned royalty of $2 each per week is exacted
from exhibitors, are, to a large extent, machines
that had boon bought outright by exhibitors or
rental agencies during the past ton years or more,
and the exaction of the royalty upon machines,
348 which in many instances had for many years been
owned outright by agencies or exhibitors, was
simply an arbitrary exaction, illustrating the at¬
titude which the Patents Company and the li¬
censed manufacturers had taken toward the busi-

J. J. Lonon.

Sworn to before me this]

15tli day of December, 1911. j
Wm. A. Young,

Notary Public No. 4, >

New York County.

G heater New York Film Ren¬
tal Company, I

Plaintiff,

against

Motion Picture Patents Com¬
pany and others,

Defendants.

State and County op New York, ss. :

Abraham Carlos, being duly sworn, says:

I live at 1517 Washington Avenue, in the Bor¬
ough of the Bronx, City of New York, and am
engaged in business as an exhibitor of motion
pictures at 5780 Third Avenue, in the Borough
of the Bronx, City of New York. My place is
licensed by the Motion Picture Patents Company,
and I hold a license signed by that Company au- ^5 1
thorizing mo to carry on business as an exhibitor
of licensed motion pictures, and am required to
display the license in a conspicuous place in my
theatre. I have two projecting machines, which
are also licensed by the Patents Company.

I have dealt with the Greater New York Film
Rental Company, the plaintiff in this action, since
April, 1910, obtaining licensed film from that
company, and am still dealing with it.

Before April, 1910, I obtained licensed film
from the Imperial Filin Exchange, a rental agen-

118

3j2 ( Affidavit of Abraham Carlos.)

ay engaged in business in the Borough of Man¬
hattan, City of New York. I have done bitsinoss
with that agency since December, 1908, and con¬
tinued to do business with it until April, 1910,
at which time I was notified by the Motion Pic¬
ture Patents Company that the license of the Im¬
perial Film Exchange had been cancelled, and
that I must not lease any more film from that
concern.

Whenever the license of a rental agency is can¬
celled, immediate notice of the fact of cancellation

353 is given to all licensed exhibitors, warning them
not to take any more film from that agency.

I have known one A1 Harstin during the past
three or four years. Ho conducted a rental ex¬
change before the organization of the Motion Pic¬
ture Patents Company, and was one of those who
did not obtain a license from the Company. lie
handled independent or unlicensed film for some
time after the organization of the Patents Com¬
pany, and then went out of business and closed
his agency.

During the past three or four months, I have
known Harstin as an agent or solicitor for the

354 General Filin Company, and ho is well known
throughout the trade in that capacity, and deals
with many licensed exhibitors in behalf of the
General Film Company.

On or about November 20, 1911, said Harstin
called upon mo at my place of business, and told
me that the license of the Greater New York Film
Rental Company had been cancelled, and that
within a week or so it would get no more films,
and he urged mo to make a contract with the Gen¬
eral Film Company for film, and said that if I
would make the contract immediately I could get

( Affidavit of Abraham Carlos.) 333

a better contract than if I waited until after the
Greater New York Company had lost its license,
because there would bo so muny of the customers
of the Greater Now York Company applying to
the General Film Company for film that those
who name early would get the best “runs.”

I was taking the fourth and fifth “runs” from
the Greater New York Company, and Harstin told
me that the General Film Company could take just
one more customer iit that time for those “runs,”
and that if I would make a contract immediately
I would get those “runs,” and that ho could not 356
promise them to me if I waited another week.

I told him I would take the chances, and refused
to make a contract with the General Film Com¬
pany.

Beginning in the early part of November, 1911,
there had boon frequent rumors that the Greater
Now York Film Rental Company would soon lose
its license, and I know several exhibitors who had
boon dealing with the Greater New York Com¬
pany who became frightened and left it, and made
contracts with the General Film Company.

Although, as is well known in the trade, the
prices charged by the General Film Company for 357
its films have generally been higher than those
charged by the Greater Now York Company, yet,
during the last two months, tile General Film Com¬
pany has offered lower prices to customers of the
Greater Now York Company for the purpose of
inducing them to change. It has offered better
“runs” for the same prices ns exhibitors wore
paying for less desirable “runs,” and has also
offered to supply “specials” — that is, additional
reels over and above those regularly supplied—
without additional cost, although it charges its

120

( Affidavit of Abraham Carlos .)

regular customers extra for the “specials,” as
does the Greater New York Company.

It has been generally believed in the trade tlint
these inducements were offered merely to entice
away the customers of the Greater New York
Company, and that after the General Film Com¬
pany had got control of them the prices would be
raised.

A. Carlos.

Sworn to before me this 35th)
day of December, 1911. J
Raphael Betll,

Notary Public,

N. Y. County, No. 109.

360

121

SUPREME COURT,

Greater New York Film Rental
Company,

Plaintiff,

against

Motion Picture Patents Com¬
pany and others,

Defendants.

State and County of Neiv York, ss. :

Samuel P. Weissmann, being duly sworn, says:

I live at 1327 Forty-third Street, in the Borough
of Brooklyn, City of New York, and am engaged
in business as an exhibitor of motion pictures at
2138 Eighth Avenue, in the Borough of Manhat¬
tan, City of New York.

I have dealt with the Greater Now York Film
Rental Company, the plaintiff in this action, for
about three years, leasing licensed film from it for
exhibition in my place. I am licensed by the Mo:
tion Picture Patents Company as an exhibitor.

Early in November, 1911, my recollection being
Hint it was between the fitli and lltli of November,
one A1 I-Iarstin, whom I have known for three
or four months, and who is and was, at the time of
his talk with me, and for several months before
that, an agent of the General Film Company, came
to mo at my place of business, and told me that the
Greater New York Film Rental Company would

364

(Affidavit of Samuel P. Weissmann.)

soon lose its license, that the license was about
to be cancelled by the Motion Picture Patents
Company, and I10 urged me to make umuigoinoiilo
through him with the General Film Company for
a supply of licensed Him for exhibition in my
place of business.

Before this conversation, Ilarstin had called
upon mo several times, and tried to induce mo to
leave the Greater Now York Film Rental Com¬
pany and got my film from the General Film Com¬
pany. Ho represented the Waters Agency, which

365 was controlled by the General Film Company,
and he assured me that I would get better service,
and I10 offered me a better “run " than I was get¬
ting, for the same money I was paying to. the
Greater Now York Company. Such contracts
are only made from week to week, and there would
be nothing to prevent the General Film Company
from raising the prices after the first week. I
refused to change, however.

At the conversation in November, Ilarstin said
I would better make arrangements immediately
with, the General Film Company, because if I de¬
layed another week I would not bo able to get as

366 good a deal and could not be sure of as good
“runs”, as I could have if I made arrangements
then. Ho said that the Greater New York Film
Rental Company would get no more films after
Saturday, November 18th.

I declined to make any arrangement with the
General Film Company.

It is generally known throughout the trade that
the only remaining licensed rental agency in the
City of Now York, excepting the General Film
Company, is the plaintiff, the Greater New York
Film Rental Company.

123

(Affidavit of Samuel P. IVeissmann.) 367

Within the past two and a half years there have
been a number of such licensed exchanges in the
City of Now York, but they have all been absorbed
by the General Film Company, which is operat¬
ing the various exchanges under the former
names.

Before the organization of the Motion Picture
Patents Company, there wore more rental
agencies in the City of New York than after the
organization of that company, because it was gen¬
erally understood that the Company refused to
license a number of the former agencies. 368

Samuel P. Weissmann.

Sworn to before mo this)

10th day of December, 1911. J
Raphael Brill,

Notary Public,

N. Y. County, No. 109.

369

SUPREME COURT,

NEW YORK COUNTY.

Greater New York Film Ren¬
tal Company,

Plaintiff,

against

Motion Picture Patents Com-
37 1 pany and others,

Defendants.

State and County of New York, ss. :

Gustavus A. Rogers, being duly sworn, says :

I am one of the attorneys for the plaintiff in
this action, which is about to he begun by the is¬
suance of the accompanying summons.

The attorneys for the plaintiff are Messrs.
Rogers & Rogers, whose office and Post Office
372 address is 1G0 Broadway, in the Borough of Man¬
hattan, City of New York.

An order to show cause, returnable in less than
five days is asked for because it is of urgent im¬
portance that the motion to continue the injunc¬
tion be heard without delay.

The next term of this . Court at which this cause
can be tried is appointed to be held in New York
County on the first Monday of February, 1912.

125

( Affidavit of Gustavus A. Rogers.) 373

No previous application has been made to any
Court or Judge for a temporary injunction hero¬
in, or for an order to show cause.

Gustavus A. Rogers.

Sworn to before, mo this!
lfith day of December, 1911. J
Raphael Brill,

Notary Public, No. 109,

New York County.

375

January 21, 1916,

Messrs . Holdon and Lanahan:

I wish you would draft up to-day, so
that it can be gotten to Mr. Edison not later than tomorrow, a
memorandum showing the exact conditions under which the settlement
was made with Pox, and also what each manufacturer, the 0. P. Co.,
and the M. P. P. Co. got in the way of releases as a matter of future
protection. Please send me copy of said memorandum.

I am going out of town, to be gone until Monday, and
am anxious that Mr. Edison should know at onoe what this settlement

CHW/IWW

°- ht'

Us£ l

Mr. Vr'ils on:-

January 31, 1916.

m SETTLEMEHT GREATER MOT YORK FILM RFHTAL CO.
vs. GEHERAL FILM COMPAHY et al.

The settlement fin the above matter was effected Jan¬
uary 1916 on the following basis:

The sum of §300,000 was paia to William Fox as Presi¬
dent of and on behalf of the Great Hew York Film Rental Company,
the said sum being contributed equally by each of the following
named parties, that is, §30,000 each: General Film Co., Vita-
graph Company of America, Motion Picture Patents Company, Thomas
A. Edison, Inc., Salem Company, Lubin Manufacturing Company,
Essanay Film Manufacturing Company, Selig Polyscope Company,
Pathe Freres, and Biograph Company. The Lubin and Selig Com¬
panies gave notes instead of cash.

'The Edison Company received a check from the Greater
Hew York Film Rental Company amounting to §4.20 in settlement
of the Edison, Ino. account against the Greater Hew York Film
Rental Company*

A release dated January 19, 1916 was duly executed in
approximately thirty copies by the Greater Hew York Film Rental
Company, William Fox, Eva Fox and Michael Fox. Mr. Holden in¬
sisted that an executed copy of this release be delivered to him
before turning over the check of Thomas A. Edison, Ino., and such
a copy was so delivered. This copy ie in Mr. Berggren*s files.
The other copies were placed in the hands of Mr. George F. Soull
to be delivered to. the several defendants upon the execution of

oertain releases running to the Greater Hew York Film Rental
Company and William Fox ana to he executed hy certain of the
defendants. We have delivered to Mr. Soull the following
releases :

General Release dated January 19, 1916 of Greater Hew
York Film Rental Company and William Fox hy Thomas a. Edison,
Inc.

General Roloase dated January 19, 1916 of Greater Hew
York Film Rental Company and William Fox hy Edison Manufac¬
turing Company.

Copies of these releases are on file with Mr. Berggren. The
release received hy us and now on file with Mr. Berggren runs
to various corporations and individuals named therein and in¬
cluding the following: Thomas A. Edison, Inc., Edison Manu¬

facturing Company, Frank I. Dyer and William Belzer. it is ex¬
pected that each of the releasees will ultimately receive an exe¬
cuted copy of this release. This release also extends to all
offioers or employees now or heretofore oonneoted with the said
several corporations with respect to oertain acts. The Greater
Hew York Film Rental Company also relinquished any olaim or right
it may have had under any contract to he supplied with film hy
any of the licensed manufacturers named in the release. For the

exact terms of this document, reference should he made to the
original.

-3-

Y/hile the release of the defendants was signed by
offioers of the Greater How York Film Rental Company and by all
of its stockholders, there were also resolutions adopted at a
stockholders meeting and at a directors meeting, authorizing the
execution of the roleaso, and certified copies of these resolu¬
tions are on file with the General Film Company,

Provision was made for the discontinuance of suit, and
I understand that a stipulation was entered into by the attorneys
for the respective parties providing for the entry of an order for
this purpose. Hr. Scull is familiar with this feature of the
matter.

There was also an agreement entered into between the
Greater Hew York Film Rental Company and the General Film Company,
whereby the General Film Company, for the payment of $60,000 in
twenty- five promissory notes of S2000 each, payable on Jan. 86,

1916 and each of the twenty-four weeks thereafter, purchased from
the Greater Hew York Film Rental Company the latter’s entire stook
of motion picture film, eta., and took over oertain leases and also
assumed certain liabilities of the Greater Hew York Company. For
the exact terms of this agreement, reference should be had to the
copy thereof.

During negotiations leading til the above settlement,
a preliminary agreement was made between the manufacturers to
subscribe a fund amounting to $300,000, to be contributed to
equally by the following companies, namely: General Film Co.,

-4-

Vita graph Company of America, Motion Pioture Patents Company,
Thomas A. Edison, Inc,, Kalem Company, Bubin Manufacturing Co.,
Essanay Film Manufacturing Company, Selig Polyscope Company,
Pathe Ere res, and Biograph Company, which said fund was to he
placed in the hands of Messrs. Albert E. Smith, Frank J. Marion
and Jeremiah J. Kennedy as Trustees, and to he used to pay any
final judgment which may ho obtained in the suit or to effect
a settlement. Inasmuch as a settlement was actually made the
next day, namely, January 19, 1916, thiB agreement became of no
importance. A copy of the Bame O.K.M by Mr. Edison is on file
with Mr. Berggren.

HL-JS

%'(- 13

. Hr. Berggren:-

January 31, 1916

BE SffiffiffiEHEHT GRINDER DEW YORE El HI RPH3?aX, CO. va
GEITERAB EIIM CQMPAIIY ot al. 0 VS*

During the negotiations leading to the above settlement,
a preliminary agreement was made between the manufacturers to
subscribe a fund amounting to §300,000, to be contributed to
equally by tho following companies, namely: General Film Com¬
pany, Vitagraph Company of America, Motion Picture Patents Co.,
Thomas A. Edison, inc., Ealem Company, lub in Manufacturing Co.,
Essanay Film Manufacturing Company, Selig Polyscope Company,

Rathe Erores, and Biograph Company, and to be placed in the
hands of Messrs. Albert B. Smith. Erank J. Marion, and Jeremiah
J. Kennedy as Trustees, and to be used to pay any final judgnent
that might be obtained in the suit or to effect a settlement.
Inasmuch aB the Battlement was aotually made the next day, namely, ’
January 19th, this agreement became of no importance. However,"

I hand you a copy of the same which should be filed with, the
other papers relating to this matter. This copy is of Importance
because it has boon O.K.'d by Mr. Edison, and Mr. Wilson ahd Hr.
Holden consider it as evidencing their authority to make tk
settlement finally entered into. ' -

Kindly acknowledge receipt of this paper.

HL-JS

Legal Department Records
Motion Pictures - Case Files

Motion Picture Patents Company v.

Independent Moving Picture Company of America

This folder contains material pertaining to the suit brought by the Motion
Picture Patents Co. against the Independent Moving Picture Co. in the U.S.
Circuit Court for the Southern District of New York. The case was initiated in
February 1 91 0 and involved the alleged infringement of Woodville Latham's
U.S. Patent 707,934. The selected items are from the complainant's record
and consist of the index, bill of complaint, and testimony of William K. L.
Dickson.

[PHOTOCOPY]

PAGE

Bill of Complaint . 1

Replication . g

Testimony.

Fred A. Dobson,

Direct

William Main,

Direct .

Eugene Lauste,

Direct .
Cross . .
Redirect
Recross .

William K. L. Dickson,

Direct .

Cross-examination

Redirect .

Recross

Raphael Retter,

Direct . .

Redirect

Recross

Woodville Latham,

Direct .
Cross . .
Redirect
Recross

117

119

120

144

1S4

1SG

190

215

210

219

25S

329

330

Emil W. Kleinert, '

Direct

[PHOTOCOPY]

Frederick A. Anthony,

Direct .
Cross . . .

Thomas W. Stephens,

Direct .
Cross . .

Harry B. Marvin,

Direct .
Cross . .
Bedirect
Kecross

Parker W. Page,

Direct .

Frank B. Waterman,

Direct
Cross .

Thomas Armat,

Direct
Cross .

370

379

3S4

400

402

403

407

40S

447

511

504

Papers referred to and reproduced:

Jenkins Letter of April 25, 1890 . 552

Jenkins Letter of Ang. 30, 1895 . 553

Jenkins Letter of Aug. 8, 1895 . 557

Extract Jenkins Letter Sept. 7, 1895 . 559

Extract Jenkins Testimony in Armat Case . . 501
Extract from Jenkins Becord . 509

Complainant’s Exhibits:

Latham Patent in Suit . 10 700

E. & H. T. Anthony & Co., Assign¬
ment . 11

Anthony & Scovill Co., Assignment. 11 01

Mutoscope & Biograph Co., Assign¬
ment . 11 58

Ansco Co., Assignment . 12 07

iii

Complainant’s Certificate of Incor-

^ poration . 12

Drawing of Defendant’s Camera ... 15 720

Warwick Camera . 40

Certified Copy of Latham Drawings 79

Lauste’s Deposition in Latham-Casler

Interference . SO

Lauste Photograph . 117

Lauste Sketch of First Taking Ma¬
chine . 119 722

Film of Grififo & Barnet Fight . 130

1 i Better 1S97 Deposition . ISO

Woodville Latham’s'' Deposition in

Armat Interference . 220

Otway Latham’s Deposition in Ar¬
mat Interference . 220 031

Gray Latham’s Deposition in Armat

Interference . 220 078

Otway Latham Bote of Experiment 224
Article in Sunday Mercury, May 5,

1S95 . 237

Clipping from Sun, April 22, 1S95 . . 239

Colt Bills and Letter . 255

Latham Exhibit Bo. 7 . 250

Clipping from Chicago Inter-Ocean . . 258

Latham’s British Patent, 1890 . 2S8

Bill of Boston Gear Works . 029 344

Eastman Kodak Co. Bill, Feby. IS,

1S95 . ’ . 029

Eastman Kodak Co. Bill, April 5,

1S95 . 030

Eastman Kodak Co. Bill, April 27,

1895 . 030

Decision of Court of Appeals in Ar¬
mat Interference . 031

[PHOTOCOPY]

Circuit Court of the United States

Southern District of New York.

In Equity,
No.

Patent No.

707,934,

Latliam.

To the Honorable the Judges of the United
States Circuit Court for the Southern
(District of New York :

The Motion Picture Patents Company, a cor¬
poration organized and existing under the laws
of the State of New Jersey, and haying a regular
and established place of business at New York
City, in the County and State of New York, brings
this its bill of complaint against Independent Mov¬
ing Picture Company of America, a corporation
organized and existing under the laws of the State
of Illinois, and having a regular and established
place of business at No. Ill East 14th Street, in
the Borough of Manhattan, City of New York,

Motion Picture Patents Com-
i ^Complainant,

.Independent Moving Picture
Company of America, .

Defendant.

[PHOTOCOPY]

County and State of New York, within the South-
orn Judicial District of New. York, within which
district, as well as elsewhere throughout the United
States the acts of infringement hereinafter com¬
plained of have been committed.

And thereupon' your orator complains and says
that it is informed and believes, and therefore
avers, as follows:

I. That prior to the 1st day of June, 1896, one
Woodville Latham, a citizen of the United States,
residing in the City, County and State of New
York, was the first original and sole inventor or dis¬
coverer of certain new and useful improvements
in projecting kinetoscopos, which were not known
or used by others in this country before his in¬
vention or discovery thereof, and not patented or
described in any printed publienton in this or any
foreign country, before his invention or discovery
thereof, or more than two years prior to the ap-
plication below mentioned, and not in public use 01
on sale in the United States for more than two
years prior to his said application, and not aban¬
doned by him; and that the said Woodville Latham
duly made application for letters patent of the
United States for the said invention or discovery
on or about the 1st day of June, 1S96, in accord¬
ance with the then existing laws of Congress.

II. That thereafter by certain mesne assign¬
ments in writing, duly executed and delivered, and
duly recorded in the United States Patent Office,
the E & H. T. Anthony & Company, a corpora¬
tion of the State of New York acquired the entire
ri„l,t title and interest to the said invention or
discovery in projecting kinetoscopes and in and to
qnirl armlication for letters patent, and to nny

letters patent which might be granted for the said 7
invention or discovery, which said assignment or
a duly certified copy thereof is ready to be pro¬
duced in Court/If your Honors so require.

III. That after the requirements of the then
existing laws of Congress had been duly complied
with in all respects by said applicant and his suc¬
cessors in interest, letters patent of the United
States numbered 707,931, signed, sealed and exe¬
cuted in due form of law, for the said invention
or discovery, were granted in the name of the said
Woodville Latham aS assignor to the said E. & H.

T. Anthony & Company on the 26th day of August, 8
1902, whereby, there was secured to the said E. &

H. T. Anthony & Company, their successors, legal
representatives and assigns, for a term of seven¬
teen years from the said date, the full and exclu¬
sive right of making, using and selling, and of caus¬
ing tp be made, used and sold throughout the
United States, the said improvements in projecting
kinetoscopes, as by said letters patent, or a duly
certified copy thereof, to be produced in Court will
more fully and at large appear.

IAr. That, by certain mesne assignments in writ- g
ing, duly executed and delivered and duly record- >
ed in tile United States Patent Office, all the right,
title and interest in and to the said invention or
discovery in projecting kinetoscopes, and in and to
the said letters patent therefor, including the right
to sne for and collect all damages and profits there¬
tofore accrued by reason of past infringements ot
the said letters patent by the manufacture, use or
sale of apparatus embodying the said invention or
discovery, passed to and were acquired by your or¬
ator; and your orator is now the full and exclusive

[PHOTOCOPY]

«'

owner of said letters patent and all rights there¬
under, as by said assignments or duly certified
copies thereof to he produced in Court will more
fully and at large appear.

Y. That the utility and validity of said inven-
■ions and said letters patent have been widely recog¬
nized and acquiesced in by the public, and that
pour orator and its predecessors have expended
great efforts and large sums of money introduc¬
ing said patented invention into practice; and that
your orator and its predecessors have enjoyed, and
but for the infringements hereinafter set forth and
others similar thereto would still he enjoying all
the benefits and advantages of the said invention.

VI. That your orator and its predecessors have
riven 'due notice to the public of the grant of said
letters patent No. 707,934 and of its rights tliere-
ander, in the manner prescribed by law.

YU. That the defendant has well known all the
facts hereinbefore set forth, but contriving and
conspiring with others to injure your orator and
to deprive it of the profits, benefits and advantages
whicli might and otherwise would have accrued to
your orator from the said patent, has, since the
date of its issue, and also since the acquirement of
the said letters patent by your orator, without the
license of your orator and against your orator’s
will and in violation of its rights, made, used and
sold and caused to be made, used and sold, and
now continues to make, use and sell, within the
Southern District of New York and elsewhere in
the United States moving picture apparatus, each
of which embodies the invention or discovery de¬
scribed and claimed in your orator's said patent
707,934, the exclusive right to make, use and sell

which is by law vested in your orator as aforesaid ;
and the said defendant in disregard of your
orator’s rights refuses to pay to your orator the
profits which it has made by such unlawful manu¬
facture, use and sale or to desist from further in¬
fringement of the said patent; all of which acts
are in violation of your orator’s rights and are
contrary to equity and good conscience and tend
to the manifest injury of your orator in the prem¬
ises.

VIII. That by reason of the said unlawful acts of
the defendant, your '■orator has suffered and still
suffers great and irreparable loss and injury, and
lias been deprived and is being deprived, of great
gains and promts which it otherwise would have
received and enjoyed, hut which have been received
and enjoyed by the said defendant; that the said
defendant intends and threatens to continue such
infringement and is prepared and ready so to do ;
and that your orator is unable to state how many
machines employing the invention described and
claimed in the said patent have been unlawfully
made, used or sold as aforesaid by the said defend¬
ant, and is unable to state the. extent of the profits
received and enjoyed as aforesaid by the defendant
from such unlawful making, using and selling, but
that your orator believes the same to have been
very large and prays a discovery thereof. .

IX. Your orator therefore prays :

1. That the said defendant, Independent Moving
Picture Company of America, may be required to
make, according to the best of its knowledge, in¬
formation and belief, full, true, direct and perfect
answer (not however under oath, which is hereby
expressly waived) to all matters hereinbefore

[PHOTOCOPY]

16 stated and cliarged the same as if specifically inter¬
rogated as to each.

2:That a writ or writs of subpoena ad respond¬
endum may issue from and under the seal of this
Court, directed to the said defendant, Independent
Moving Picture Company of America, commanding
it to appear and answer unto this bill on a day cer¬
tain therein to be named, and to' abide by and per¬
form such order or decree in the premises as to this
Court shall seem meet and as may be required by
the principles of equity and good conscience.

17 3. That the defendant, Independent Moving Pic¬
ture Company of America, may be decreed to ac¬
count for and pay to your orator the profits unlaw¬
fully derived as aforesaid from the violation of
your orator’s rights; and that upon entering the
decree against the defendant your Honors may as¬
sess or caused to be assessed under your direction
the said defendant’s unlawful profits, and in addi¬
tion thereto the damages sustained by your orator
by reason of the said infringement; and that your
Honors may increase the actual damages so as¬
sessed to a sum equal to .three times the amount

IS thereof under the circumstances of the unlawful
and unjust infringement.

4. That a writ of injunction may be issued out of
and under the seal of this Honorable Court, per¬
petually restraining and enjoining the said defend¬
ant, Independent Moving Picture Company of
America, its agents, attorneys, officers, clerks, em¬
ployees, servants and workmen, from any further
manufacture, use or sale in any manner of the said
patented improvements, or any part thereof in vio¬
lation of your orator's said rights; and that the

infringing devices in possession of or use by the de¬
fendant may be decreed to be destroyed or de¬
livered to your orator for that purpose.

5. That a provisional or preliminary injunction-
may be issued out of and under the seal of this
Honorable Court restraining and enjoining the
said defendant, Independent Moving Picture Com¬
pany of America, its agents, ' attorneys, officer's,
clerks, employees, servants and workmen from any
further manufacture, use or sale in any manner of
the said patented improvements or any part there¬
of, pending this cause. *»

6. That such other and further relief may be
granted and decreed to your orator as the equities
of tlie case may require and as io your Honors
may seem meet.

MOTION PICTURE PATENTS COMPANY,

By George F. Scull.

Secretary.

Keiir, Page, Cooper & Haywood,

Solicitors and of Counsel for Complainant.

Parker W. Page,

Of Counsel.

State of New' Jersey.

George F. Scull, being duly sworn, deposes and
says :

I nin Secretary of the Moving Picture Patents
Company the complainant corporation named m

[PHOTOCOPY]

22- the foregoing bill of complaint; I. turn read the
said bill of complaint and of my own knowledge
know it to be true, except as to the matters there¬
in stated to be alleged upon information and be¬
lief, and as to those matters I believe it to be true.

GEORGE F. SCULL.

• Subscribed and sworn to be¬
fore me this 9tli day of
February, 1910.

Anna R. Klehm,

23 Notary Public,

State of New Jersey,

Commission expires June, 1913.

CIRCUIT COURT OF THE UNITED STATES,
Southern District op New York.

Motion Picture Patents Com¬
pany, i

Complainant, l

Independent Moving Picture l
Company op America, 1
Defendant.

The replication of the above-named complainant
to the answer of the above-named defendant.

The repliant, saving and reserving to itself all
and all manner of advantage of exceptions winch

may be had and taken to the manifold errors, un- 25
certainties and insufficiencies of the answer of said
defendant, for replication thereunto saith that it
does and will aver, maintain and prove its said
bill to be true, certain and sufficient in the law to
be answered unto by said defendant, and that the
answer of said defendant is very uncertain, evasive
and insufficient in the law to be replied unto by
this repliant; without that, that any other matter
or thing in the said answer contained material or
effectual in the law to be replied unto, confessed or
avoided, traversed or denied, is true; all which
matters and things tjiis repliant is ready to aver,
maintain and prove as this Honorable Court shall 23
direct, and humbly prays as in and by its said bill
it has already prayed.

Dated, New York, Hay 11th, 1910.

KERR, PAGE, COOPER & HAYWARD,

Solicitors for Complainant.,

[PHOTOCOPY]

New York, April 10, 1911, 11 A nr

Met pursuant to adjournment at the offices of
Kerr, Page, Cooper & Hayward, 149 Broadway
New York City.

Present-PARKER W. PaGE, Esq./ Counsel for Com¬
plainant. Mr. Bichard Eyre, Counsel for De¬
fendant.

WILLIAM K. It. DICKSON, a witness called on
behalf of the Complainant, having been first duly
sworn, deposes in answer to interrogatories by
Complainant's Counsel, as follows:

Ql. Please state your name, age, residence and
occupation?

A. W illiam Kennedy Laurie Dickson, Consult-
ing Engineer, 4 Denman Street, Piccadilly Circus,
London. I am 49 years of age.

Q2. Have you ever known personally Mr. Wood-
ville Latham?

A. Yes.

Q3. When did you first become acquainted with
him?

A. In the early part of 1894..

Q4. What was Mr. Latham’s business or occupa¬
tion at the time you knew him?

A. When I first became acquainted with him, 363
he was interested in the purchase of Edison kineto-
scopes and made such purchases from Mr. Edison
at that time. It was in my province to exhibit the
machines to purchasers and so I became acquaint¬
ed with that gentleman and his sons.

Qo. Was Woodville Latham a scientific man?

Mr. Eyre: Objected to as irrelevant and
immaterial.

A. Yes. .

_ ever have any other business rela¬

tions with Mr. Latham in connection with moving 363
picture apparatus other than that which you have
stated in a preceding answer? and if so, will you
please state fully what your relations with Lira

Mr. Eyre: Objected to as it appears to
bring new matter into the case which is not
proper rebuttal testimony and notice is
given that at the proper time motion will
be made for leave to take testimony in reply
to this or any similar line of testi-

[PHOTOCOPY]

'William K. L. Dickson.

William K. L. Dickson.

mony or to expunge the same from the
record, and it is agreed that this objection .
be made now once for all to any testimony
of this character.

A. As a brief preamble, prior to answering these
questions in full, X would like to say that a few days
ago, I read for the first time Mr. Woodville
Latham's testimony in an Interference in the
Patent Office under the head of Woodville
I.atham vs. Thomas Armat and found same to my
intense surprise, incomprehensibly vindictive.
Had I known of this testimouj', nothing would
have kept me from coming over and correcting such
statements, as I hope now to do, hoping that this
may not be out of place.

As stated before, I met Mr. Woodville Latham
for the first time in the early part of (to the best
of my knowledge) 1894, when he came to the
Edison Laboratory to purchase six or more kineto-
scopes which he intended to use for exhibition
purposes in New York. I found Mr. Latham to be
a congenial spirit, owing to his scientific attain¬
ments and our friendship grew and throughout
such acquaintanceship, we spent many evenings dis¬
cussing the scientific questions of the day. One
subject, however, was rigidly taboed, namely, mov¬
ing photography. Professor Latham, I believe,
was a man of letters, Professor at a Virginia
College or University, a lecturer in Physics.
Shortly after my meeting him at the Edison
Laboratory, I invited him to my home and to cut
this testimony as short as possible, I will now give
the salient points that I presume may be of interest
iu this testimony, namely, Mr. Woodville Latham,
shortly after I had made his acquaintance, asked

me to recommend him a good mechanician without
stating what he wished him for. I recommended a
late employee of Mr. Edison, whom I knew to be a
thoroughly capable man in his line. A week or so
later, Mr. Latham called at my house, thanked me
for the recommendation, remarking, that he
was just the man he wanted, and then for the first
time, disclosed that he wished to carry out some
idea he had in moving photography. This rather
took me aback and I told him that I should never
have recommended anyone to him had I known for
what purpose he wished to use this mechanician. 36S
However, the deed was done and there was nothing
more to be said. Mr. Woodville Latham then did
bis best to persuade me to come and join forces
with them. This I steadfastly declined, owing to
the fact that my position and interest with Mr.
Edison were entirely satisfactory to me, and that
the Latham proposition at that time was an un¬
known quantity. Sometime in October, 1894, Mr.
Woodville Latham and his two sons, Messrs.
Otway and Gray Latham, accepted an invitation
to dine at my house, at 106 Cleveland Street,
Orange, N. J. and after the guests had all left, Mr. gqg
Woodville Latham and his two sons made a propo¬
sition to me, in the presence of my wife, which was
untenable, which, however, was modified and to
which I agreed heartily, namely, that, as Mr.
Woodville Latham was desirous of going into
public exhibitions of the kinetoscope, using same
for projecting purposes, if on trial, it proved satis¬
factory, I should use my best endeavor to persuade
Mr. Edison to give them the exclusive right for this
special branch of the business, and that if I suc¬
ceeded, I should have a substantial interest, subject
Of course, to Mr. Edison’s approval. I signed such

a letter, which was approved of by my wife, whose
sense of right and wrong naturally was of the
highest order.

I immediately set to work and arranged to make
a trial at Columbia College, with the courtesy and
in the presence of the Professors and one or two
other gentlemen, Woodville Latham and his sons
being invited. All the commercial kinetoscopes,
were in use but I was able with some parts of an
obsolete machine, to demonstrate and prove to my
own satisfaction and that of Mr. Latham, and the
others present, that if I succeeded in persuading
Mr. Edison to make such a contract as previously
stated, regarding the use of the Edison film and
kinetoscopes, possibly with slightly increased open¬
ing in the shutter, and as intensely concentrated
light as possible, all would be well. The short film
and mechanism were, of course, replaced in Mr.
Edison’s laboratory and the next morning X did my
best to persuade Mr. Edison to grant these gentle¬
men this privilege. Mr. Edison, however, pointed
out to me that he had already bound himself to
Messrs. Bnff & Gammon. I need not say that my
disappointment was intense and I called on Mr.
Woodville Latham to acquaint him of my failure.
It was then I learned from this gentleman that
they intended therefore, to go into this whole busi¬
ness themselves and that he was going to carry out
some ideas he had and construct machines to pro¬
duce negatives and positives for projecting pur¬
poses. It is stated in the Woodville Latham-
Armat testimony, among other things, that I was
in his employ. This nonsensical, and for some
hidden purpose, vindictive remark, I must emphati¬
cally deny, and while I have the opportunity, wish

to state that at no time was X ever in Mr. Wood¬
ville Latham’s employ, nor gave him any sugges¬
tion or ideas in connection with moving photo¬
graphy. I note in thq Woodville Latham testi¬
mony that there is a mention of a Dickson Stop
Mechanism which was experimented on and failed.
The truth of the matter was simply this: That
during one of our many scientific discussions, he
caught me napping and I asked him if he had seen
a curious stopping device for actuating a clock¬
work, which I described not having the slightest
intention ait the time that he should use this for
the work on which he was engaged. I was careful
not to ask him what he was doing or what his
mechanism was, as I wished my relations with him
to remain purely social. Mr. Latham seemed to
jump at the conclusion that this would be most
useful. I, however, pointed out to him I fancied
it would be far too slow for his purpose, and that
I certainly did not wish him to bring me into this
business unless I decided to leave Mr. Edison and
join them, which at present I had not the remotest
idea of doing. During the months of December,
1804, and January, 1895, I had several opportuni¬
ties of visiting on invitation, a shop which they
had in New York and saw that they were in full
swing, making so-called modified kinetoscope pro¬
jectors. At the same time, they were working on
an apparatus for taking negatives. I particularly
avoided examining same and cannot testify as to
the construction of this same mentioned taking
machine until I received an invitation from Mr.
Woodville Latham to come over as quickly as
possible as he had something particularly interest¬
ing to show me. On arriving on the scene, I found
Mr. Otway Latham, Mr. Gray Latham, Mr. Eugene

[PHOTOCOPY]

Lauste and another workman very much excited
and they proceeded to show me every detail ot the
before mentioned taking machine. A short piece
of film was tried and I was asked to develop same
which I did. Mr. Otway Latham for some hidden
reason, asked me to write a note dictating the
words “To my friend Woodville Latham, Compli¬
ments of W. K. L. Dickson,” etc. If his object was
to compromise me, he very nearly did succeed and
so I fell into the trap, for as previously stated,
throughout all these proceedings, neither by word
7 or action, did I have anything to do with their
work. After this, I thought it best to have as
little to. do with them as possible, until I had made
up my mind if I should join them or not. The
crisis came on April 2nd, 1895, when I was accused
by an individual then in the employ of Mr. Edison,
to the effect that my relations with Messrs. Latham
were not honorable, etc. etc. That person had the
pleasure of being confronted with Mr. Edison by
me and asked to repeat the remarks he made to
me. Mr. Edison’s remark was, “I don’t believe a
d— word of it.” I then insisted on Mr. Edison
> making his choice betu'een the aforementioned
person and myself, but either owing to Mr. Edison
having contracted with this person, allotting to
him full power or whatever it was, and the decision
not being sufficiently whole-hearted, I lost my
temper and resigned on the spot. The date, as
previously given, was April 2, 1895. I then joined
my own company, the Portable Electric Light &
Power Company, and throughout the time I was
engaged in this company, Messrs. Latham received
from me occasional visits and towards May, I as¬
sisted in the taking of a glove contest on the roof of
Madison Square Garden.

Before closing this preamble, I might add, that
I notice in the Latham testimony, that a certain
amount of stock in the Lambda Company was given
me. This is quite incorrect. The true facts of the
case were these. Mr. Woodville Latham insisted
in forcing this stock on me and which I as persist¬
ently refused, there being no quid’ pro quo, as long
as I was engaged with Mr. Edison and not having
done anything for the Latham Company. Until I
left, I could not, of course, take something for noth¬
ing. As I was still towards the last undecided,
if I should join them or not, at the advice of my 3S0
solicitor, Mr. Edmond Congar Brown, of New
York, I sent Mr. Latham to him and learned after
that Mr. Brown decided in my interest to hold such
stock in trust, pending the time that I should de¬
cide to join them.

In conclusion, to this rather lengthy preamble, I
am fortunately able, even although I. learn with
much regret, that the Messrs. Latham have passed
on, to give an account of themselves elsewhere, that
I have other witnesses who can substantiate all I
have said in regard to the personal slander which
I need not say, has very much upset me. 381

.1 take this opportunity of apologizing, at the
same time thanking Counsel on both sides, for their
kind indulgence.

Counsel for defendant states that he is
hardly in a position to accept the thanks of
the witness as he feels that he must now ob¬
ject to the answer as being incompetent, as
bringing in reference to testimony which
has not been given in this case and which
cannot be duplicated in this case, since it

res:

382 _ Wiliam K. L. Dickson-. _

appears that Latliam, whose prior testimony
in Interference was criticised, is dead. The
answer is further objected to as irrelevant
and immaterial.

Becess.

After Becess.

Q7. You state in your last answer that you were
employed by Mr. Edison in 1894 or 5. In what de-
3S3 pertinent were you at Mr. Edison’s place?

A. The Electrical Mining or Milling Department
and the Moving Picture Photographic Department.

QS. How much experience did you have with the
apparatus and the processes practiced in the Mov¬
ing Picture Department?

A. In 1SS7, Mr. Edison ashed me if I under¬
stood photography. I replied I did, also the chem¬
istry of photography. He then proposed to start a
department in which I was to have exclusive
charge developing liis ideas in moving photography,
which I did from that time on until I left him.
gsi Q9. And you left him, ‘as I understand it, April
2, 1895?

A. That is right.

Q10. You have also referred to seeing a camera
or taking machine in Woodville Latham’s shop.
I wish you would now state in as much detail as
you can the exact circumstances connected with
the incident, giving as far as you are able, the dates
when you first saw that machine sufficiently to
understand its construction?

A. I received a' letter of invitation from Mr.
Woodville Latlmm a month or so before I left Mr.
Edison in which letter Mr. Woodville Latham

[PHOTOCOPY]

129

_ William K. L. Dickson. _ 355-

urged me to come over as soon as possible to see
what they had accomplished, I found those present
Mr. Otway Latham, Mr. Gray Latham and Mr.
Eugene Lauste, a workman. There may have been
others, but I do not remember, except that I un¬
derstood Mr. Woodville Latham was not well on
that evening, as I recall. In the centre of the room
or shop the taking machine, which I was aware
had been worked on for some time past, was ap¬
parently finished, judging before I was shown the
interior by the general excitement of those present.

- f i With a flourish the cover was lifted displaying an

T upright mechanism composed, to me as first im-

! pression, of endless rollers, sprockets, etc. On ex¬

amination and witnessing the run made by Mr.

I . Eugene Lauste, Mr. Otway Latham assisting in

threading a piece of (what appeared to be)

I spoilt film, I noticed that this piece of film

I was passed over a sprocket wheel, the film being

i held in place by a roller pressing against the

j sprocket wheel holding the film in position. Prom

I this sprocket a loop was formed and passed to a

second sprocket, the film being similarly held in
position by a roller, the film was next carried 387
through a window gate. Below the window gate
• the film was passed over a sprocket wheel, the film
held in position by another roller. From this
u ^7 sprocket wheel the film formed a loop and was plac-

i ' ed over a fourth sprocket wheel again similarly

! held by a roller. I noticed that next. to the lowest

sprocket wheel, which I might count as the third
sprocket wheel, was rigidly attached to a Maltese
cross stopping device which I understood at the
time was to be their method of stopping and start¬
ing the film. This third sprocket wheel was fast-

[PHOTOCOPY]

130

William K. L. Dickson..

131

William K. L. Dickson.

oned in some way with the second sprocket wheel
immediately above the gate and the two outside
sprocket wheels 1 and 4 were similarly attached.
After running through this short piece of black'
appearing film the box was taken into the dark room
situated at the end of the shop, and Mr. Otway
Latham and one other, presumably Mr. Eugene
Lauste, threaded the machine with some sensitive
unexposed film. This was brought out of the dark
room and the question arose how to make a record
on this film. X found, however, that it had been
settled to photograph the filament of an incandes¬
cent lamp and someone present suggested swinging
same during the exposure. I was asked to turn the
handle, I stupidly did, and further adding to my
stupidity by not being able to see through their
purpose, developed for them a short piece of the
exposed film in the previously mentioned dark
room, tearing off a piece of about six inches long,
the result being a sharply focused and clearly de¬
fined image of the carbon filament standing out in
black relief against a more or less mottled back¬
ground. Mr. Otway Latham wished his father, who
was ill at the Bartholdi Hotel, to have that night
the first sample and asked me to pin this to a piece
of paper, he himself dictating the words which I
remember perfectly to be “To my friend Woodville
Latham, compliments of W. K. L. Dickinson.” I
should not have remembered the exact date and
hour of this note had not my memory been refresh¬
ed by reading Mr. Latham’s testimony but I am
absolutely certain that in every detail this event
took place at midnight or thereabouts a month or
more prior to leaving Mr. Edison, which date as we
know was April 2, 1893.

Qll. Where was the shop where the above oc¬
currences took place?

A. I can only remember it was a broken down
looking place in Franklin Street, New York, the
shop, however, seemed to be well equipped.

Q12. Will you describe a little more fully the
location of this shop which you say was on Frank¬
lin Street?

A. I am afraid that that is more than my mem¬
ory will assist me in at this late date, but owing to
the circumstances connected with this to me more
or less disagreeable business the name of Franklin
Street is deeply impressed on my mind.

Q13. Was this in New York City?

A. New York City, yes.

Q14. Can you tell where that street was located
with references to some central point say the City
Hall?

A. I am afraid I cannot. It certainly was in the
lower portion of New York. •

Qlo. Mr. Lauste has given testimony in this case.
Were you present at the time that he gave his de¬
position? .

A. X was.

Q16. Lauste says that' the Latham shop was on
Frankfort Street. Was he mistaken in this?

A. Mr. Lauste was quite right. It was certainly
Frankfort, now that the matter is brought to me.

Q17. Did you in writing the note at Mr. Otway
Latham’s dictation attach any date to it?

A. I did, both date and hour.

Q18. Was the date which you wrote that of the
day on which the experiment was tried?

A. Yes, about 10 minutes after the short piece
had been developed, and in fact the piece of film

[PHOTOCOPY]

132

394 _ Wiliam K. L, Dickson.

"•us lying on a piece of blotting paper at our side.

Q19. I show you now tbe sketch Mr. Lauste made
at the time of giving his deposition in this case and
which is in evidence as Complainant’s Exhibit
Lauste Sketch. Will you please state in what re¬
spects, if any, that sketch illustrates the construc¬
tion of the feed mechanism of the camera as you
saw it on this occasion at the Frankfort Street shop
to which you have just testified?

A. The sketch I hold in my hand is undated and
395 pm'porting t0 be a sketch made on the Hotel Bre-
voort letter head, the sketch representing a scries
of rollers and sprocket wheels and a side sketch of
a Maltese-cross stop motion. This I was aware had
been drawn and put in evidence at the time of
Lauste’s testimony. The sketch appears substan-
tially to be what I observed at the time but I do not
recollect the exact mode of attaching the various
sprocket wheels together and presume this was
substantially what I saw with the exception of a
roller which is drawn on the top of the first
sprocket wheel. This I did not, see at the mid-
. night test.

39G Q20. Using this sketch as a matter of conveni¬

ence, will you please state how the first and
fourth, that is the upper and lower sprocket wheels
in the taking machine as you saw it at the time of
the midnight experiment were driven; that is to
say, was their motion intermittent or continuous?

A. I am sorry I cannot help you very much in re¬
gard to this for I do not remember the exact method
adopted at that time to run these said mentioned
first and fourth sprockets. They were, however,
working in unison continuously, not intermittent¬
ly, and presumably belted or geared as shown in
the sketch, which is quite likely.

William K. L. Dickson.

Q21. I did not mean to inquire as to the specific
devices for driving them, but only as to the charac¬
ter of their motion, and as to this your answer is
■what?

A. That the first and fourth sprockets shown in
the sketch and as seen by me at that time were
running continuously and not intermittently.

Q22. And how was it with the second and third,
or the two intermediate sprockets, what was the
character of their movements?

A. Intermittently running sprocket wheels.

Q23. Did you make any estimate at the time of 393
the rate at which you operated this camera?

A. Yes, and in fact we had a lively discussion
and I think my estimate was accepted, as being per¬
haps the only one present who could judge, though
roughly, of the speed at which the picture, was
token, which I estimated, considering how the
machine was geared, to be about half the speed at
which we ran the Edison kinetograph, which
kinetograph was run about 40 to the second.

Q24. As to the conditions of operation and finish
of the machine on the night in question, what have
you to say? 399

A. I am afraid very litle, if anything, but I
never saw that machine again for some time after
I had ieft Mr. Edison. The machine, however, ap¬
peared to be constructed on two uprights with the
rollers and sprockets one above the other, the gate
or film carrier being centralized between the four
rollers, two sprockets above and two below.

Q25. Was the machine on the night when you
first operated it in such condition that it could be
used practically for the talcing' of moving pictures?

Objected to as calling for a mere conclu¬
sion and indefinite.

[PHOTOCOPY]

134

400 _ _ William IC L. Dickson,

A. I felt convinced and somewhat troubled that
we had a serious competitor especially so on exam¬
ining the consecutive views of the filament swaying
lamp. I examined the film closely with a lens and
found perfect definition, and except for a slight
halation due to the intensity of the light filament,
but I considered at the time that the machine
would answer the purpose for which it was intend-
. ed.

Q2G. You have spoken of assisting in photo-
40! graphing a glove contest on the roof of the Madison
Square Garden. Do you remember the names of
the contestants in this contest?

A. I do. Griffo and Barnet.

027. Do you remember when this contest took
place?

A. Shortly after I left Mr. Edison.

Q28. You do not recall the precise date'’

A. I do not.

Q29. What machine did you use for taking these
pictures? ’

A. The same that I tested on the lamp filament.
Q30. You mean the machine you first used at the
402 Frankfort Street shop?

A. Yes.

Q31. Was the machine when you used it for
photographing the Griffo and Barnet fight in the
same condition as when you photographed with
it the swinging incandescent lamp in the Frank¬
fort Street shop?

A. Yes, but with the exception that I added, or
suggested that they should add, a supplementary
roller on the upper sprocket wheel. The effect of
this roller, I judged, would be to allow the film to
have a 'better grip on the teeth of the sprocket

135

' William K. L. Did: son, ,no

wheel. In other words, I made this suggestion to
obviate any possible tearing out of 'the perfora¬
tions, as they were intending to use a very neavy
film.

Q32. And this supplementary roller you think
was in the machine when you photographed the
Griffo and Barnet fight?

A. Yes. This roller I judged necessary and my
suggestion was carried out a day or two before the
fight, tested and proved efficient.

Q33. You heard Lauste’s testimony on this point
and you do not agree with his recollection of it? *04
Objected to as imporper, the witness
should simply testify, to his own recollection
without reference to what Lauste may have
said.

A. I recollect his testimony, being present, ana
would have corrected it at the time but naturally
I should have been out of order. The roller was
placed on the machine a day or two before the
fight.

Q34. Do you recall how much film you used in
photographing the Griffo-Barnet fight. 405

A. Not from recollection as to the specific
amount used, but it seemed to me it was a very
large and heavy roll, sufficient to take several
rounds or bouts.

Q35. Approximately how long was that film if
you can state?

A. I am unable to state correctly the length as
I did not measure it, but remember it took a very
long time to reel it up in the dark room, the reel
appearing to be seven or eight inches or perhaps
more in diameter.

Q3G. How did the width of film used in this ma¬
chine compare with that manufactured by Edison
for use in liis kinetoscope?

A. It was considerably wider than the Edison
kinetoscope film.

Q37. Have you preserved any specimen of that
film and if so, will yon please produce it?

A. I have. I now hand you a film which I found
among my film collection in London purporting to
he a piece of film of the Griffo-Barnet fight taken
on tlie roof of Madison Square; size without per¬
forations inch and a half by three quarters of an
inch, which I hand in evidence.

Q3S. That is to say, the size of the pictures is an
inch and a half by three quarters of an inch?

A. Yes.

Q39. Has this film been trimmed, that is to say
the edge cut off?

A'. Yes.

Q40. Did it originally hare perforations on each
side? >

The piece of film produced by the witness
is offered in evidence and marked Complain¬
ant’s Exhibit Film of Griffo and Barnet
fight.

Q41. Do. you know what, became of this taking
machine after it was used for photographing this
Griffo and Barnet fight?

A. I do not. As I left very shortly after the tak¬
ing of this picture, not being satisfied with Messrs.
Latham methods as far as I was concerned, join¬
ing the Mutoscope and Biograph Company, of
which I became a member. The only explanation

[PHOTOCOPY]

1ST

_ William K. L, Dickson. _

I can give why these gentlemen testified later in
such a vindictive manner was perhaps due to my
leaving them high and dry and joining the Bio¬
graph Company.

Q42. Have j’ou had any experience in reading
the drawings of patents illustrating mechanical
devices?

A. Yes.

Q43. Please look at the patent to Latham which
is here in suit and Complainant’s Exhibit Latham
Drawings which is a full sized reproduction of the
original drawing of that patent, and consider par- 410
ticularly Figs. 2 and G of that patent, and state,
as far as your present recollection will permit, how
the taking machine which you used to photograph
the swinging incandescent light in the Latham
shop on Frankfort Street, and afterwards used to
photograph the Griffo and Barnet fight, differed
from or resembled the machine which is illustrated
in the figures to which I have called your attention?

A. Fig. 2 purports to be a projecting kinetoscope.

I cannot say very much about it although I know
they were working on something of this order.

Fig. 6 is called a projecting kinetoscope. Fig. G 411
shows practically what I saw at that date as far
as concerns the arrangement of sprockets and roll¬
ers illustrating an upper and lower loop, but this
illustration G is not as I saw it at that time. For
some reason or other the teeth are omitted on num¬
ber 55 and the film did not pass over the roller set
so far back ns 5G. This evidently was drawn some¬
time after, and the roller 56 which I devised is
taken on 46, answering, however, almost the same
purpose. In the machine that I tested at the time,
the film came straight down. I notice in the

sketch, although indicated, the stop motion is not
illustrated except in Figure 5, which naturally be¬
longs to this apparatus of Fig. 6. While called a
projecting kinetoscope naturally could also be
called a taking machine.

Q44. Do you know what became of that taking
machine which you used to photograph the Grififo
and Barnet fight?

A. I haven’t the remotest idea.

Q45. How long after you left Mr. Edison April
2, 1895, were you associated in any way or nego-
413 tiating with Mr. Latham and those interested with
him?

A. I do not remember being associated with the
Lathams even after leaving Mr. Edison, except in a
friendly way to give them a helping hand whenever
I could, such as the taking of the Griffo-Barnet
fight, for the simple reason that I soon became dis¬
gusted with their business methods as previously
stated and sought other fields. , Had they behaved
as gentlemen I most likely should have thrown my¬
self heart and soul into the work, taken up the stock
held in trust by my soliiitor and joined them in
444 their work. It is fortunate, however, that I did
not, and therefore authorized my solicitor to re¬
turn them the stock.

Q46. Did you ever have any conversation with
Mr. Woodville Latham after you left Mr. Edison
on the subject of moving picture apparatus?

A. Yes.

Q47. What did you find as to the extent of his
information on this subject?

A. I found him to be well conversant with the
art as far as it went at that time and thought he
was capable of originating new ideas and might
arrive at some good work outside of what he bad

[PHOTOCOPY]

139

William K. L. Dickson-. _ 4ig

already accomplished and even then_ hesitated if
I should throw in my lot with him; his person¬
ality and that of his sons, however, knocked that
on the head.

Answer objected to as incompetent being
merely 'the opinion of the witness as to
possible capacity of Latham to produce hy¬
pothetical results at some time.

Adjourned to Tuesday, April 11, 1911, at 11
o’ciock A. M. 416

New York, April 11, 1911, 11 A. M.

Met pursuant to adjournment.

Present: Counsel as before.

Examination of Mr. Dickson continued:

Q48. How long before you took the pictures of •
the swinging incandescent lamp in the Frankfort
Street shop, had you any knowledge of the camera
used on that occasion and what was the extent of 417
that knowledge?

A. I am afraid I cannot be of very much use in
giving you any description or exact dates, but to
the best of my knowledge I wns aware that a
taking machine was in process of construction
shortly after Christmas, or to be absolutely cer¬
tain, we might say during the early part of Jan¬
uary, 1895.

Q49. How did you Obtain this knowledge?

A. I remember calling on Mr. Woodville Latham
at the shop in Frankfort Street about that time.

timeT Did 3 °U Sl!e thiS macllille in the shop at that

A. I did, and Mr. Lanste was busy with same, i
could not, of course, nor did I feel it right to ex-
amine any of the work, as long as I was not con¬
nected with them.

Q51. What kind of a man was Professor Wood-
, e Latham? Please tell ns anything that you
know about the character of his attainments, in¬
genuity or the like, that yon may hare observed
lg during your acquaintance with him?

Objected to as incompetent. The making
of a specific invention cannot be proved by
evidence as to character and attainments. '

A. I found in Mr. Woodville Latham a congenial
spirit as stated before, in os far as scientific at¬
tainments were concerned. Our discussions were
mostly based on general physics and what be him¬
self had accomplished in his life in regard to what
lie termed “inventions” and various ideas he had.
He spoke of different apparatus that be had in-
0 vented, but, of course, I do not know if there were
any patents. It struck me that he was highly
theoretical and his anxiety was that I should join
forces with him in this particular work he was
then engaged on. This, of course, being out of the
question, other subjects were more fully discussed
and I must say I was mncli impressed, being per¬
haps a little younger at that time, with the
amount of information he had acquired.

Q52. Have you known Eugene Lauste for a long
time? °

A. Yes.

Q53. When did you first know him?

[PHOTOCOPY]

141

_ William E. L. Dickson. _

A. Eugene Lauste worked at Mr. Edison’s lab¬
oratory for several years as mechanician, engaged
in work of precision such as electrical apparatus
for Mr. Edison and then left, seeking employment
at the Edison Ore Milling Works at.Odgen, New
Jersey, which he found distasteful and remained
out of employment some time. It was at that time
that I recommended him as a skilled mechanic to
Mr. Woodville Latham, he, Mr. Woodville Latham,
not disclosing to me what he wished this mechanic
to do for him, as already stated.

Q54. Do you know whether Lauste, at the time
he entered Mr. Woodville Latham’s employ, had
had any practical experience with moving picture
apparatus?

A. None whatever. In fact, no one was per¬
mitted to come within the sanctum sanctorum of
the moving picture department. I notice that in
Mr. Lauste’s testimony he states that he did see the
exterior of a kinetoscope and I remember the cir¬
cumstance very well. I issued a general invita¬
tion to everyone in the laboratory to. view n scene,
perhaps one of the first, if not the first, in a rough
box-cabinet shaped kinetoscope, the subject being
“horseshoeing.”

Qoo. Did you ever impart to Mr. Latham direct¬
ly or through any other source any of the features
of construction which you found embodied in his
camera when you examined the same at the Frank¬
fort Street shop on the occasion of photographing
the swinging incandescent lamp?

A. Decidedly and emphatically, no, neither by
word or action.

Q56. Prior to tlie night when you photographed
this swinging incandescent lamp at the Frankfort
Street shop, had Mr. Latham ever expressed to you

any satisfaction or dissatisfaction with Lauste':
work for him?

A. He expressed himself as being very well satis
fled with Mr. Lauste and stated that the work was
going on beautifully, or something to that effect.

Q57. What nationality is Lauste?

A. French born, a Parisian.

Q58. Does be speak English fluently?

425

Mr. Eyre: Objected to as incompetent,
and as not the best evidence.

A. No, in fact, it has always been a surprise to
me why the English language was so difficult. The
only explanation I can give is that his bump of
languages must be represented by a cavity.

Q59. Did Mr. Latham ever give you any intima¬
tion of whether Lauste was carrying out his,
Latham’s, ideas in the work that he was doing for
him?

Mr. Eyre : Objected to as secondary evi¬
dence.

A. Yes, he seemed to be always very pleased and
thought that Mr. Lauste was a most capable mech¬
anician and just the manjie wanted (to quote liis
own words) to carry out liis ideas.

Direct-examination closed.

Mr. Eyre : In view of the fact that the
only apparent purpose for the testimony of
this witness, and certainly the main purpose
of his testimony is, to make an attempt to
prove some early date of alleged invention

[PHOTOCOPY]

by Latham and in view of the further fact
that the only testimony thus far adduced by
the complainant, relating to the camera for
taking machine to which the witness has re¬
ferred, has been testimony to the effect that
the alleged invention was made by Lauste
and not by Latham, the right is reserved to
call for the production of the. witness for
additional cross-examination in case
further testimony should be offered tending
to show the malting of the alleged invention
by Latham specially if it tends to show any 428
disclosure of the invention by Latham to
this witness; and the testimony of this wit¬
ness is objected to as irrelevant and imma¬
terial unless such further testimony be ad¬
duced.

Counsel for Complainant replies that he
perceives neither the point nor propriety of
the above objections and states that all of
the facts and knowledge in his possession
with regard to the invention .of the patent
in suit by Latham is now in the posses¬
sion of counsel for defendant, counsel
for defendant having yesterday stated 4 9
that he had in his possession a copy
of the Interference proceedings in the
case of Latham vs. Armat. Counsel
further states that Woodville Latham, his
two sons, Otway and Gray Latham are dead
and this fact will be duly proved. If there
are any other living witnesses capable of
. testifying with regard to the making of this
invention by Latham, Counsel for Com¬
plainant has no knowledge of their where¬
abouts, although a most diligent search has

[PHOTOCOPY]

144

William K. L. Dickson.

145

William K. L. Dickson-. _ _ 433

been made to ascertain if there be any sncli
witnesses. Having all the facts before him
which counsel for Complainant knows of or
believes to be pertinent, counsel for Defend¬
ant is at liberty to proceed in the usual
course followed in such cases.

Cross-examination de bene esse :

XQGO. In giving the date, April 2nd, 1895, as
the date when you left Edison, are you basing your
, 431 statement upon your personal recollection?

A. No.

XQG1. What are you basing it on?

A. I have a copy in my possession of my resig¬
nation to Thomas A. Edison, witnessed by my fore¬
man, who was present at the time, the document
reading in the usual form, dated April 2nd, 1895,
and witnessed; which document I can show, on
demand.

XQG2. Did your resignation take effect at once?

A. At once, although I had one or two inter¬
views unofficially with Mr. Edison within the next
432 day or two> 111 order to clear things up which I
stated before was done to my and Mr. Edison’s
entire satisfaction.

XQG3. You moved your belongings from the
Edison Laboratory that same day?

A. Oh, no.

XQG4. How long after?

A. There was no desperate hurry and my belong¬
ings were few, if any, with the exception of a few
personal photographs that I had taken of my wife,
sister, niece, dog, I forget if there was a cat pic¬
ture ; otherwise, I do not think there was anything
else. These wore removed within the next day or

two, to my house, at 16G Cleveland Street, Orange,

New Jersey.

XQ65. Did you go to the Edison Laboratory at
at all after the first week of April, 1895?

A. No, but to Mr. Edison’s house on one occa-

XQGG. After April 2nd, 1S95, what occupation,
did you engage in and when did you begin?

A. I joined a small company which I formed
with Mr. Llewellyn H. Johnson, which we termed
the Portable Electric Light & Power Company. '
XQG7. When was that company first formed? 434
A. It was more in the order of a partnership be¬
tween that gentleman and myself, he, the financier,

I, the technical adviser. This I acquainted Mr.
Edison with, and hoped even then, if needed, would
have his support. About that time however, I met
my old friend of early Edisonian days, Mr. H. N.
Marvin, and being thoroughly disgusted with the
business methods of the Lathams, after taking the
Griffo-Barnet fight I threw up both the matters and
joined Mr. Marvin in a new moving .photographic
venture. This took place, to the best of my recol¬
lection, about two months after I left Mr. Edison. 435
Begarding the Portable Electric Light & Power
Company, so-called, we were more or less depend¬
ent upon the Chloride Accumulator Company for
a specific kind of plate, which I had designed.

Mr. Gibbs, the General Manager, came to my house,
at Orange, New Jersey, and that of Mr. Johnson, to
arrange for these plates and general contracts. Mr.
Johnson was then allowed to carry this on, if he
chose, when I joined, as stated before, Mr. H. N.
Marvin, and his associates.

XQ68. My question was only as to when the

Portable Electric Light & Power Company was
formed, and I do not think you have told me yet.

A. I did state that it was a partnership more
than a company, but for convenience sake, we
called ourselves a company.

XQG9. Well, that docs not tell me when the
partnership which for convenience, was called a
company, was formed?

A. I don’t know that I can give any exact date.
It was certainly within a week or ten days of my
leaving Mr. Edison that Mr. Johnson and I ar¬
ranged this so-called Company.

XQ70. Before or after?

A. After.

XQ71. What, if you know, has become of Mr.
Johnson?

A. I haven’t the remotest idea.

XQ72. What was the last that you know?

A. Sometime in that same year, 1895.

XQ73. What was his then location and occupa¬
tion?

A. Mr . Llewellyn H. Johnson lived in East
Orange and was connected with tiie Bicycle Heli¬
cal Tube Company. v

XQ74. What did you and Mr. Johnson, using
this company name, intend to do?

A. Portable storage battery lamps for mining
purposes and general portable use under a patent
which I took out at that time for a parabolic re¬
flector and current controlling device.

XQ75. That was the only business you had in
mind for your partnership?

A. That was the only business we had in mind.

XQ7G. Just what did the business methods of
the Lathams have to do with your deciding to give
up this partnership venture with Mr. Johnson?

147

William K. h. Dick non. _ _

A. Neither the business methods, so-called, of
the Lathams nor my relations with Mr. Johnson
had anything to do with my decision to- join an old
and trusted friend, namely, Mr. H. N. Marvin. I
found, as stated before, with regard to the John-
son-Diekson combination, that ns we depended al¬
most entirely on very light plates for portable
purposes to work in conjunction with my patent
lamp, we were disappointed that Mr. Gibbs could
not produce a sufficiently light plate to give us the
capacity required so we were forced to abandon
that particular plate and look elsewhere. This took 440
some time and we allowed the matter to drop pro
tem, until such time as we could find a light plate.
Meanwhile, I made several of these lamps which
were used with the heavier battery provided by the
Chloride Accumulator Company. As for the Lath¬
ams, I gave them such help as I deemed necessary,
such as taking the same old picture, recited several
times in this evidence and as I got to. know them
better, it was quite clear to me that further asso¬
ciation with them would be distasteful. Mr. Mar¬
vin and Mr. Edmond Congar Brown, my solicitor,
were my business confidants and they agreed with ^
me not to go too fast, as far as binding myself to
the said Lathams, and as stated before, I joined
Mr. Marvin as a certainty and I have had nothing
to regret since that decision. What has been done
with my patent lamp, I do not know, I do not care.

XQ77. You have stated (answer to XQG7)
“About that time, however, I met my old friend
of early Edisonian days, Mr. H. N. Marvin, and
being thoroughly disgusted with the business
methods of the Lathams , after taking the Griffo-
Barnet fight, I threw up both the matters and join,
ed Mr. Marvin in a new moving photographic ven-

[PHOTOCOPY]

442

William K. L. Dickson.

n your last answer tlmt this
it entirely correct or as you

ture.” I judge fron
quoted statement is »

'Timust confess I do not quite see what you
are driving at. I certainly preferred to deal with
a remunerative and agreeable business and the of¬
fer was such that X considered at the time it was
best for me to accept Mr. Marvin's offer.

XQ7S. How long did you continue associated
with Mr. Marvin’s Company?

, A. Until the present date. The association still

413 continues, under the heading of K. M. C. D. Syn-

d XQ79. What relation, if any, has that company
with the Biograph company or the same company

or predecessors under different names?

A. There was naturally no name given just at-
that time hut shortly after we met together with
two other friends of Mr. Marvin in Canastota, >-eu
York to dub the syndicate, K. M. C. D. Again
shortly after the Mntoseope Company was formed,
followed by the title The Mntoseope & Biograph
Company. >

XQSO. And what is the present name of the con¬
cern with which you are connected?

A. To be more explicit, the It. M. C. D. was the
parent syndicate in which we had our various in¬
terests allotted. All other companies throughout
the world, under the head primarily of the Muto-
scope Companies and later of the Mntoseope & Bio-
graph Companies were owned or controlled by the
parent K. M. C. D. syndicate.

Kecess.

XQ81. When you say that the Portable Electric
T.irrht & Power Company was more of a pnrtner-

119

; f

William K. L. Dickson. _ 445

ship than a Company, do you mean that there
were no company organization papers filed?

A. To the best of my knowledge, that is right.
Nothing was filed.

XQ82. What, if anything, occurred' after No¬
vember, 1894, and prior to the time that you saw
the pictures of the swinging incandescent lamp af¬
fecting the character of your relations, either with
Mr. Edison or with the Lathams?

A. There was nothing that could have affected
either my relations with Mr. Edison or with the
Lathams, if looked at in the proper light. 41 ’

XQ83. Did anything occur during that interval
which made you feel any differently as to your
duties or loyalty in connection with Mr. Edison?

A. Nothing.-

XQ84. X have understood from your testimony
that while you were at the Latham shop, at times
prior to the swinging light episode, you were care¬
ful in view of your connection with Mr. Edison, to
avoid learning the details of what was being done
in the Latham shop, but that at the -time of the
swinging light episode, you permitted all details
of the camera to be shown and explained to you. 447
If I have stated correctly, will you please explain
why you were willing to examine this camera, etc.
on the later occasion and not willing to learn what
was going on on earlier occasions?

A. You have stated this quite correctly and the
simple explanation is that the showing of the com¬
plete camera was forced1 on me and it was then- or
about that time that I was trying to make up my
mind if I should go into the exhibition business or
not. For that reason, I thought it wise to see what
they had.

XQ85. Have you retained in your possession the

[PHOTOCOPY]

A. No, I have not.

XQ8G. Did you destroy it and if so, when.

A. When I removed to England from my home
in Orange, there was a general clean-up, of course,
and presume all useless stuff was destroyed.

XQ87. Do you believe it was destroyed then?

XQSS How long had you had it in mind before
the time that you saw the swinging incandescent
4(19 lamp photographed that you might go into the ex-
hibition business?

A. As explained some time back, it was my in-
tention with Mr. Edison’s approval, to go into or
participate in the exhibition business, Edison
manufacturing, Latham to have the right. This, as
explained previously, could not be granted, owing
to a contract Mr. Edison had made with Messrs.
Kaff & Gammon; after that I was quite undecided
what to do. I did not enter into any agreement
with the Lathams. .

XQ89 At the time of the swinging lamp episode,
,.n you knew that if you should connect yourself with
the Lathams, it would be as a competitor to Edi-

might connect yourself with the Lathams, were
you not?

A. Yes, though very doubtful.

XQ91. When you say, that because you were at
that time trying to make up your mind whether or
not you should go into the exhibition business, you
therefore thought it wise to see what the Lathams
had, you mean, do you not, that you were trying to

make up your mind whether to go into the business
with them?

A. Yes.

XQ92. How long had you been considering go¬
ing into the business with the Lathams as com¬
petitors to Mr. Edison?

A. Hard to tell. Off and on, X suppose, for
some months.

XQ93. Probably as early as the time that Mr.
Edison declined to make any arrangement with the
Lathams?

A. No. <

XQ94. How many visits did you pay to the Lath¬
ams’ shop prior to the swinging light episode?

A. Difficult to say.

XQ95. For what purpose did you make these
visits?

A. My visits to Mr. Woodville Latham at the
shop or at the Bartholdi Hotel or Mr. Woodville
Latham’s visit to my house were more or less so¬
cial. In these visits the constant refrain was
“Come with us, work with us. I will make your
fortune.” If the question is leading to, if I gave
any instructions or was connected with them in .
any way as to giving ideas or assisting them, this
may be dismissed once and for all, this not being
the case.

XQ96. This constant refrain of the Lathams as
to your coming with them related to moving pic¬
ture business all through, did it not?

A. It did.

XQ97. After your first talk with Mr. Edison,
suggesting a possible arrangement with the Lath¬

ams, when did you next talk with Mr. Edison
about what the Lathams were doing?

A. There was no talk with Mr. Edison after that,
for quite some time. . ...

XQ9S. “For quite some time” is very indeflmtc.
Give me the best idea you can as to ',owlo"Slt"ns-
A. Possibly about two mouths or so before I left,
in which I told him that we might have a competi¬
tor in the Lathams. I think Mr. Edison s answer
was a shrug of the shoulders.

XQ90. Prior to April 2nd, 1S95, did you tell Mr.
Edison anything as to the camera you had seen and
the picture of the swinging light?

A. No, decidedly not.

XO100. When the Lathams forced you to look
at* this camera, they knew yon were working for
Edison. Did they ask you to promise to keep the
information secret?

XQ101. Who was the individual who accused
yon to Mr. Edison of having had dishonorable re¬
lations with the Lathams?

A W. E. Gilmore. _

XQ102. What was it that he said to Mr. Edison
about you, so far as you knoy?

A I do not know, except that I had some iela-
“B tion with them, inferring that there was something
incorrect in those relations.

XQ103. Why didn’t you tell Mr. Edison what

you had seen at the Lathams’ shop?

A Had I done so, I think it would have been
incorrect. X could only say, as X did, as stated
previously, that we may have in these people a
competitor. . ..

XQ104. Wasn’t it at least a reason for not tell¬
ing him the fact that you were then thinking you
might join the Lathams and it would be to your
interest if such event occurred, not to have Edison

_ 'William 1C, L, DicJcson. _ _

know what had been done in the Lathams’ shop
any sooner than possible?

A. There is a good deal of truth in what you say
but the thought of joining did not occur until some
«tiwe after. I commenced to realize on- the night of
the lamp test when I was invited to see that they
were seriously engaged, that I might join in the
exhibition branch of the business w-hich had been
lost sight of by Edison in putting out the kine-
toscopes.

XQ105. Do you mean by your last answer that it
was some time after the night of the swinging light 458
test that you first thought of joining the Lathams?

A. It was on the night of the test.

XQ10G. It was on the night of the test that you
first thought of joining the Lathams.

A. I first seriously thought of joining the
Lathams.

XQ107. But, you had been thinking of joining
them for several months— perhaps less seriously-
had you not?

A. No, I cannot say that, if at all, feebly.

XQ10S. Your visits to the Latham shop were
generally in the evening, were they not?

A. Naturally. •

XQ109. When you visited the shop, did you fre¬
quently talk to Lauste in French?

A. Occasionally, of course.

XQ110. How large a shop was it?

A. Not very large.

XQ111. Well, give me the best idea you can.

A. I have very little recollection of the size, pos-
sibly about 12x15, or maybe more.

XQ112. Was it all one room?

A. There was a small dark room at one end.
XQ113. But there was no separate office?

A. Yes, there was a sleeping room, it I remember
right which answered the purpose of, I presume,
office, dining room and bedroom.

XQ114. That was where Lauste slept, wasn’t it?

A. I believe so.

XQ115. What was the name of the street that
was deeply impressed upon your mind?

A. Franklin or Frankfort.

XQ116. You are not sure which, are you?

A. Yes, quite sure, since I was reminded. It was
not Franklin but Frankfort.

XQ117. What were the business actions of the
Lathams that made you find it impossible or un¬
desirable to make any definite connection with
them?

A. In deference to the death of all three parties
concerned, namely, Mr. Woodville Latham and his
sons, Gray Latham and Otway Latham, I do not
think it would be necessary, if you can do without
the answer, to push this question further.

XQ118. I am sorry, but under the circumstances
of the case, I do not feel like yielding to the rea¬
sons you give and mustmsk you to answer the ques-
2 tion.

A. My idea that morals and business should go
hand in hand decided me, and as these gentlemen
were not leading the sort of life that I was brought
up to believe in, it made me feel that the less I had
to do with them, the better.

XQ119. Do I understand that your last answer
has relation rather to the personal morals of the
Lathams than to the business actions about which I
asked?

A. I do.

XQ120. Please understand that I have not the

463

_ William K. L. Dickson, _

slightest desire to drag into this ense the personal
morals of anyone and have not asked you that. In
your answer to Q45, you said, that you “soon be¬
came disgusted with their business methods.”
What business methods were there that you be¬
came disgusted with?

A. Nothing definite or no definite proposition
was made as to our future relations, should I join.

XQ121. You have not answered my question,
which asked, what the business methods were that
yon referred to in your answer to Q45 ns having
become disgusted with.

A. As stated in my last answer, no definite ar¬
rangement as to fees could be reached.

XQ122. And was this the business method that
you were referring to as being disgusted with?

A. When I made that answer, it was principally
coupled with an answer I made previously which
was, as I understand now, not intended to be
drawn from me by you.

XQ123. Then so far as the actual business acts
of the Lathams were concerned, there was really
nothing you were disgusted with?

A. In addition to what I said, I didn’t consider 405
that they were businesslike.

XQ124. Didn’t they make you any definite
proposition with relation to how you would benefit
by joining them?

A. I presume you mean in regard to the shares
which they endeavored to force on me during my
engagement with Edison with the distinct, to me,
object of compromising me. This perhaps, may
add something towards my meaning “disgusted
with their business methods.”

XQ12S. When did they force this stock upon

[PHOTOCOPY]

156

William K. L. Dickson.

A. Or tried to— to tlie best o£ my recollection,
this was shortly after the memorable lamp test.

XQ12G. Hadn’t yon bad any previous agree¬
ment of any kind with the Lathams or any of them,
either written or verbal?

A. None whatever, except the one mentioned in
my preamble.

NQ127. Did that agreement set ont a definite in¬
terest in the business for you?

A. No. •

XQ128. Did the letter that you signed at your
467 house in October, 1894, state that it was subject to
Hr. Edison’s approval?

A. The agreement, if it is desirable to call it so,
was contained in two or three lines, to the effect
that I would use my best endeavors to persuade
Mr. Edison to give them the exclusive rights to use
the Edison film for projecting purposes and that
should I succeed, I should have a substantial inter¬
est from the proceeds of such exhibitions. At that
time, there was no thought other than that Mr Edi¬
son should supply these films.

XQ129. Did Mr. Brown hold the stock for you in
,fi8 trust by virtue of any trust agreement or other
document which would specify the terms on which
it would be delivered tovyou?

A. None whatever, to my knowledge, unless my
legal adviser got them to do something of that kind,
pending my decision.

XQ130. He took this stock before you left Edi¬
son, did he not?

A. Yes, to hold or to return, as the case might
be.

XQ131. And how was that to be decided?

A. As already explained, if I found that the ex-

137

William K. L. Dickson.

hibiting business would pay best, naturally I had
the choice.

XQ132. Without your paying anything for it,
and without having received any consideration
from you, the Lathams had insisted upon giving
Mr. Brown this stock in trust for you and you
could have it delivered to you at any time you de¬
sired. Is that a correct statement?

A. No, quite incorrect. Mr. Brown’s object was
to bold the stock so os to insure my future the mo¬
ment I left Mr. Edison. The Lathams’ object, how¬
ever, was to try and force the stock on me, for me 470
to accept same s during my sojourn with Edison,
presumably to compromise me and force me to
join them ns quickly as possible. Had I accepted
the stock, I should have had to join the Lathams
before knowing if the business were good or bad.

XQ133. Which part of my statement is incor¬
rect?

A. I mean that the incorrect part of this relates
to my receiving stock without a quid pro quo. The
stock was to be my remuneration for joining them
and as I stated before, they tried to get me to take
■ this stock before I had accomplished anything for
them, their object being to get me to leave Mr. Edi¬
son forthwith.

XQ134. Didn’t you authorize Mr. Brown to hold
the stock for you?

A. Yes and rightly too.

XQ135. Then during the following month, while
Mr. Brown was holding this stock, which you could
demand the delivery of at any time, you continued
working for Mr. Edison, undecided whether to take
the stock and leave him or whether to direct the re¬
turn of the stock and stay with him. Have I got
that much correct?

[PHOTOCOPY]

472

158

William K. L. Dickson.

A. Quite right.

XQ13G. Then when you left Mr. Edison on April
2nd, 1895, how frequently were you at the Lathams’

A. Whenever I thought fit to go to see how they
were getting on and to give them such help as was
necessary preparatory to the proposed Griffo-Bar-
net boxing match, which we all thought would give
the best test of the capabilities of the machine in
question.

XQ137. What, if any use, was made of the Griffo-
473 Barnet film?

A. Mr. Latham and his sons hired a place on
Broadway and used one of the kinetoscope pro¬
jectors, inviting the public to witness the display.

XQ138. Were you there and saw it?

A. I was.

XQ139. The Griffo-Barnet film that you pro¬
duced yesterday is a positive taken at some later
time, from the negative which you took of the
Griffo-Barnet fight. Is that right?

A. Yes.

XQ140. How did you know how fast to turn
•474 the handle of the taking machine the night of the
swinging lamp experiment?

A. A piece of blank film was run through several
times and the speed of turning the handle was
judged in these preliminary tests, but in the tests
made with the incandescent lamp the machine was
turned by hand. The pictures taken of the Griffo-
Barnet fight were run differently; to the best of my
recollection, a small motor was attached to the
camera and storage batteries used to drive same.

Adjourned to Wednesday, April 12, 1911, 11

159

William K. L. Dickson.

New York, April 12, 1911, 11 a. m.

Met pursuant to adjournment.

Present — Counsel as before.

Cross-examination of MR. DICKSON con¬
tinued :

XQ141. What was the kinetoscope projector,
such as you referred to in XQ137?

A. Briefly to describe the kinetoscope projector,
in question 137, there was little or no difference 476
between the Edison kinetoscope and what they
were using, hence the name, with the exception
that the film was considerably wider, the slot in
the shutter enlarged as much as possible, so as to
retain some degree of sharpness while the film ran
continuously from one large spool above the gate
to the lower reel. This was the projector which I
had an opportunity of running or testing in their
Broadway exhibiting place.

XQ142. Was it a peep-hole machine?

A. No.

XQ143. That wasn’t the same machine that was 477
known as the eidoioscope, was it?

A. Yes.

XQ144. Did this machine project pictures on a
screen?

A. Yes.

XQ145. How large were the pictures?

A. I should judge, to the best of my recollection,
the pictures were projected 9 feet by 5, or a little
less.

XQ146. Was any use ever made of the swing¬
ing light film?

[PHOTOCOPY]

100

478 William K. L. Dickson.

A. None that I know of, unless it was kept as

XQ147. I asked yon in a previous question how
frequently after April 2nd, 1895, you were at the
Lathams’ shop, and you said, “Whenever! thought
fit to go.” Please give me a little more tangible
answer.

A. Being more or less undecided as to what I
intended to do, and wishing to probe into the pos¬
sibilities as described to me in such glowing col-
ors, I went as often as I could, to be exact, which,
I believe, is what you wish to know; might say,
to the best of my recollection once or twice a
week, and sometimes .daily at their 'exhibit on
Broadway.

XQ14S. Prior to April 2nd, 1895, and all dur¬
ing the time that you were visiting the Lathams’
shop and also visiting Lathams at the Hotel Bar¬
tholdi, where were you living?

A. As stated in my preamble, you will find I
mentioned lfiG Cleveland Street, Orange, New
Jersey.

XQ149. And it is your testimony that none of
480 the visits prior to the night of the swinging light
episode were made as matters of business, but
purely for social purposes?

K. No.- In my preamble I clearly stated that
it was principally social, but with the object of
trying to judge the best thing to do, to join them
or not, in the exhibition business.

XQ150. When was it that the subject of pho¬
tography as a matter of discussion between La¬
tham and yourself was no longer rigidly tabooed?

A. The leading questions naturally placed hy
Mr. Latham tended always in the direction of

161

William K. L. Dickson.

moving photography, the matter nearest his lieavt,
which to me being dangerous ground, by mutual'
consent was tabooed as much as possible. The
general principles relating to light waves, general
photography, as known to all and being common
property, were discussed, of course, at length j but,
as stated before, neither by word or action was
anything disclosed or discussed in relation to the
work I had in hand for Mr. Edison, nor did I wish
to know anything as to the minutiae or detailed
construction of what they were doing. It waif bet¬
ter so, until I had settled the momentous ques¬
tion of joining them or not.

XQ151. But my question asked when the sub¬
ject of photography as a matter of discussion be¬
tween you was no longer “rigidly tabooed”?

A. The one exception to this rule I touched on
some time back when we discussed a curious
movement that I had noticed in an old clock which
Mr. Latham jumped at and tried. This, however,
as stated before, might be put down as a slip.
The movement, of course, as stated at the time,
would be very slow.

XQ152. Question repeated.

A. I presume you mean when did I feel free to
discuss fully moving photography as known in
the art, with the exception always, of course, of
what was kept sacredly to myself, namely: the
work I had been engaged in for Mr. Edison, and
would say that this occurred naturally immediate-'
ly after the 2nd of April, 1895.

XQ153. You have spoken of the differences be¬
tween the film, of the Latham kinetoscope pro¬
jector and the Edison kinetoscope. Wasn’t there
an additional difference, namely: that the film of

the Latham device was transparent and that of
the Edison kinetoscope opaque?

A. No; that could hardly be so, as a negative
is never projected in both the Edison kinetoscope
and the so-called Latham projecting kinetoscope
positives or positive transparences were used.

XQ134. In the Edison kinetoscope the observer
iooked directly upon the positive with a light on
the other side of the positive, and the film was suf¬
ficiently opaque to prevent the light blinding or
confusing the eye of the observer. Is that cor¬
rect?

A. Not exactly. In the kinetoscope Viewing
Machine a small i or 5 candle power lamp was
used, behind which a parabolic mirror was placed,
the rays crossing at a point through a narrow slot
in shutter, above which an endless band of posi¬
tive pictures ran continuously. These pictures
were enlarged 2 y2 diameters by a magnifying glass
and the result appearing in a similar manner as
an ordinary transparency held up to the light. In
the Latham projecting kinetoscope a more power¬
ful light was used in the form of an arc lamp of
nearly 3,000 candle power, and concentrated
through a short focus condenser on to the picture
or transparent positive film, thence through a pro¬
jecting lens to the screen.

XQ155.- Then it is your testimony that the Edi¬
son kinetoscope employed a substantially perfectly
transparent film?

A. Yes.

XQ15G. All through its commercial history?

A. Yes.

XQ157. What was the construction of the
“curious stopping device for actuating a clock¬

work” which you described to Latham, and which
he thought would be useful for the work on which'
he was then engaged?

A. It might be briefly described as a U-shaped
pair of plungers, the ends cut off at right angles
coming to a point. These plungers coming against
a peg, pushed the peg downwards by a sliding ac¬
tion due to the angle of the plunger. One arm of
the U-shaped plunger passing beyond the peg or
series of pegs placed at equal distances locked the
pegs in position, the second arm of the U-shaped
plunger engaging the next peg as the other was 488
released. I think, perhaps a rough sketch may
be of some assistance, as I find it rather difficult
to describe from memory. The fact is, this move¬
ment is too well known and can be found, I think,
in any text book on clock mechanism.

XQ158. When you described this mechanism to
Latham, were you describing a mechanism which
was in principle that of one of the feeding mech¬
anisms that had been tried for cameras in Edi¬
son’s laboratory?

A. No, decidedly not.

XQ159. None of the Edison cameras that had 4S9
been tried had employed a feeding mechanism in
which a reciprocating member having a surface in¬
clined to the direction of its reciprocation had
caused intermittent movement of the film by en¬
gaging something connected with the film by the
inclined surface?

Mr. Page: Objected to as irrelevant and
immaterial, and as an inquiry into matters
in no way pertinent to the issues of the
, present case.

A. None whatever; in fact, it was entirely un¬
fitted for any other purpose but for what it was
intended, namely: the slow clock-escapement move¬
ment.

XQ1G0. At the time that yon described this de¬
vice to Latham yon knew that he. had in mind the
making of cameras or projectors with intermittent
moving films, did yon not?

A. Yes; he so intimated he was going to or was,
I forget which.

XQ1G1. Where were you when this interview
took place?

A. To the best of my knowledge at the Hotel
Bartholdi.

XQ1G2. At that time you were familiar with
the work thus far done at Edison’s laboratory,
with cameras having an intermittently moved film,
were you not?

Objected to as irrelevant and immaterial.

A. Yes.

XQ1G3. And by that time had such cameras
been used for the commercial work of taking pic-
" tures for the Edison kinetoscope?

Same objection.

XQ1G4. What was the construction of the feed¬
ing mechanism in the camera used in this com¬
mercial work?

Same objection.

A. Briefly, a horizontal continuously traveling
disk containing one slot adjacent to a vertical

[PHOTOCOPY]

1G5

_ William E. L. Dickson. _ 4g3

three-toothed disk, one of the teeth resting on the
first mentioned horizontal rotating disk slipped
through said mentioned slot, giving an impulse to
further mechanism controlling the film on a
sprocket wheel. The three-toothed vertical disk
was kept in tension in a forward direction while
resting one of the teeth on the first mentioned
horizontal slotted disk.

XQ1G5. Did the intermittently acting mech¬
anism pull directly upon the film on the supply
reel without any intermediate devices engaging the
film? 494

A. Yes.

XQXGG. This feeding mechanism that you have
described was the only one used in cameras for
taking pictures for the Edison kinetoscope prior
to your leaving Edison, was it? <

A. Yes.

XQ1G7. Do you recall making some experiments
with Otway Latham at Columbia College?

A. Yes.

XQ1G8. Those experiments were made, well,
before the end of 1894, were they not?

A. Yes. 495

NQ1G9. What were those experiments?

A. As stated before, the experiment I wished to
try was to see if with a powerful arc lamp the
kinetoscope could be used for projecting or not,
and if so, then X could approach Mr. Edison for
the rights of exhibition by projection in accordance
with my agreement letter with Mr. Woodville La¬
tham to the effect that I would use my best en¬
deavors to persuade Mr. Edison to give us the
right of using his film. We found the experiment,
which was made openly, at Columbia College, (that
being my preference) to be sufficiently encour-

— V-~

[PHOTOCOPY]

aging for mo to keep my agreement. The experi¬
ment simply consisted in running an old trans¬
parent film through an Edison kinetoscope in the
form of a short endless band, the shutter hole be¬
ing slightly enlarged so that we could get more
light through. The picture projected was about
o feet square. This was done in the presence of
some of the Columbia College professors; Mr. Wood-
ville Latham or Mr. Otway Latham, I forget which
was present.

XQ170. Do you recall making a sketch or
497 sketches of the stop mechanism or intermittent
feeding mechanism for the Lathams?

A. No, I hare no recollection and in fact, I can
certify most positively that no such sketches were
ever made by me at any time prior to my leaving
Mr. Edison, unless perhaps I sketched out the clock
stop motion already discussed.

XQ171. Can you say positively whether you did
or did not sketch out such mechanism and leave
the sketch with one of the Lathams or Mr. Lauste?

A. To the best of my recollection, I think it is
quite likely that I did„as Mr. Woodville Latham
was very anxious to try this device.

XQ172. You did know at the time, then, that
Mr. Latham wanted to try this stop mechanism
you suggested, in connection wth his development
of moving picture machines?

A. Yes, for he stated as much, that he wished to
try it.

XQ173. Had Mr. Latham, prior to the first of
November, 1894, repeatedly shown you drawings of
a machine for projecting pictures, having intemit-
tent movement of the film?

A. No.

167

William K. L, Diclcso n.

A. To the best of my recollection, he stated that
he had many sketches and derices but I positively
refused to inspect same for obvious reasons.

XQ175. Was the Columbia College experiment
one that lasted more than a single day?

A. It lasted for an hour or an hour and a half,
possibly two hours, as we could not take up the
time of the professors and attendants. It was
only on one day.

XQ176. Do you know of any experiments made
by Woodville Latham in October or September,

1894, in which part of the apparatus employed 500
was furnished by you from the Laboratory of Mr.
Edison?

A. None whatever, with the exception of the Co¬
lumbia College test which I made.

Beoess.

XQ177. Mr. Lauste came to this country to give '
his testimony in this case at the same time that
you did, did he not?

A. Yes.

XQ178. Was it you who arranged with him over
there about coming? 501

A. No.

XQ179. When did you last see him on the other
side?

A. At his house a week before leaving.

XQ180. And when last before that?

A. About a year and a half before.

XQ181. You came over on the same steamer?

A. Yes.

XQ182. You both knew that you were coming
over to give testimony with reference to the work
in Latham’s shop?

[PHOTOCOPY]

XQ183. And am I to understand that tlie ar¬
rangements for Lauste coming over here had all
been made entirely independently of you?

A. Yes.

XQ184. You do not fix the date of February
26, 1895, except by what yon have read in a printed
copy of Latham’s previous testimony, do you?

A. No.

XQ1S5. Did you ever write a letter to Lauste
asking him whether he remembered that yon were

603 the one who had suggested the loop in the film of
the Latham camera?

A. No, I hare no such recollection.

XQ18G. Can you say positively that yon never
wrote such a letter to him?

A. I can.

XQ1S7. Or any other, asking him whether he
remembered your invention of any part of the
Latham camera — or something to that general ef¬
fect?

A. I have no recollection whatever of writing
any letter on this subject.

XQ1SS. In Complainant’s Exhibit, Lauste Depo-

604 sition, I find the following: “XQ13G. Well, did
Mr. Dickson speak to you about it? A. No; he
wrote to me some time ago, and asked me if I re¬
member that he is the inventor of the loop, and I
said no, because I made the machine before he
came.” Can you say positively that there is no
basis for this statement?

A. None whatever, I have no recollection of
writing any such letter. I remember calling him
up on the ’phone prior to going to his house and
telling him that there was a case coming on which
1 learned from Mr. Koopman, also over ’phone.

169

William K. L. Dickson.

. that we might have to go out to America to testify
as to the Latham inventions, and there was a
question of a loop to bo testified on. '

XQ189. That was just shortly before you started
to this country, the end of last month?

A. Yes.

XQ190. Had Lauste already heard of it, did he
say?

A. Yes.

XQ191. In your conversations with Lauste, be¬
ginning on that day over the telephone, and up to
the time that he gave his testimony, -what was said
between you as to who had suggested the loop?

A. Mr. Lauste, in his cabin on board the “Bal¬
tic” talked on various things in connection with
his old work and also touched on the loop, knowing
as he did that that feature of the work seemed
to be of importance and explained how he had first
thought of it by seeing a loop in a certain book
at some time or other, catalogue, I believe he said,
of machinery, and that when they were experiment¬
ing Mr. Latham was very desirous of preventing
the film from tearing and so this loop was added
and a general talk of this kind. I wasn’t particu¬
larly interested in all this. It was my part of the
programme to remember what I did, what I saw
and so on.

XQ192. The testimony, or the extract from testi¬
mony given by Lauste, which I read to you, was
given in 1898, 13 years ago. Having this in mind,
does it aid to refresh your recollection and modify
it in any way after your having written such a
letter?

A. No, I can only state what I remember and
what I see and say to the best of my knowledge

505

607

[PHOTOCOPY]

508 _ "William K, L, Dickson.

that I have no recollection whatever of writing
sudi n letter.

XQ193. Was the feature of a loop between the
exposure window and the supply roll a new one
to you when yon saw it at the swinging light
episode?

A. Yes.

XQ19J. Is it true that yon told Mr. Laustc before
T.austc had met Latham that you had a good situa¬
tion for him in connection with a machine for
projecting pictures and did you then give him a

509 letter of introduction to Mr. Latham?

A. Part right, part wrong. I gave Mr. Lauste
a letter of introduction to Mr. Woodville Latham,
not knowing or having the slightest clue that Mr.
Latham was going into competition which on the
face of it would have been to jeopardize my own in¬
terests. It was after I had given this introduction
that Mr. Woodville Latham, in an interview, said
that he had some good ideas in moving photography
which he wished carried out. No mention was
made in my letter of introduction as can plainly
be seen, in regard to what class of work Mr. La-

510 tlmm wanted Mr. Lauste. to do.

XQ195. At the time you gave the letter to Lauste,
did you know that the younger Lathams were
engaged in business in connection with the employ¬
ment of Edison kinetoscopes?

A. I knew the young Lathams had six or more
machines on exhibition somewhere in New York
and if I remember correctly, I simply inferred that
they wished a good mechanic to look after and
keep their machines in running order.

XQ190. Do you recall anything as to what the
hook was that you were using in the Edison Lab-

171

William K. L. D iclson.

oratory and that Laustc referred to as being one
that contained a showing of this loop?

A. I am afraid I cannot help you as I do not
remember the book.

XQ197. Do you recall whether Lauste ever came
to you while you were still with Edison to get what
ideas you had for these moving picture machines?

A. I do.

XQ19S. State the circumstances, please.

A. Mr. Lauste came over from New York unso¬
licited by me and told me he was instructed by
Mr. Woodville Latham to see if I would help them 512
in regard to some difficulty or something or other,
presumably a stop motion of some kind. I re¬
member distinctly and wish it quite clearly under¬
stood that in keeping with all I did at the time, I
pointed out to Mr. Lauste that I could give him no
assistance whatever in the art until I had made
up my mind to join forces with them.

XQ199. Do you remember whether before the
time of the swinging light pictures you many times
told Lauste that you didn’t like coming to the
shop because it was compromising to you and that
when you would leave Edison it would be all right, pjg
that yon would come every day but until then you
could not do it?

A. Quite right. I remember every word of it.

XQ200. How long was that before the day when
you told Mr. Edison that he would have to choose
between Gilmore and yourself and upon his refus¬
ing to discharge Gilmore, the handing in of yonr
resignation?

A. I haven’t the remotest idea. What I said to
Lnuste did occur ns stnted, but when it occurred,

I do not remember.

XQ201. Did the film pass upward or downward

[PHOTOCOPY]

anything about wlmt has

in the machine that took the swinging light photo¬
graphs?

A. Downward.

XQ202. Did yon know E. W. Kleinert?

A. Yes, I saw a man by that name at the Latham
shop.

XQ203. Do yon know anything about what has
become of him?

A. Xo.

XQ204. Did you take a picture or help to take a
picture with the same camera on the roof of the
Scott building after the swinging light episode and
before the picture of the Griffo-Barnet fight?

A. Xo.

XQ205. Do you recollect a conference in Xew
York between Otway Latham, yourself, your wife,
Mr. Edmond Cougar Brown and Mr. John Murray
Mitchell?

A. I do.

XQ20G. State the time when this conference oc¬
curred and also state what occurred at the con¬
ference.

A. I have no recollection of the date of confer-
1 ence but I remember it was in regard to the same
old thing, to join or not to join and also in relation
to, that if I would join them, I should have a cer¬
tain amount of stock allotted to me. I think that
was the purpose of the conference in question, but
as for the stock, this stock was never transferred
to me nor have I to. this day seen a share certificate
and it was only the other day that Mr. Lauste
handed me for my inspection a share certificate un-
der the heading of the Lamda Company.

XQ207. Wasn’t it at this conference thnt it was
agreed among all of you that a quarter of the
stock of the Lamda Company be assigned to Mr.

Brown because you did not wish to make a contract
in your name and so place yourself that the pro¬
priety of your actions might be questioned?

A. Xo. The stock at Mr. Edmond Congar
Brown’s suggestion, should be put in his name, for
the sole reason that he wished to safeguard my in¬
terests in case I should join them, the business
proving satisfactory. X know very little more
about this, but I have no doubt Mr. Edmond Con-
gar Brown could give you all the information you
require.

XQ20S. You gave Mr. Brown a power of attorney 5XS
to act for you in these matters, did you not?

A. I do not remember giving Mr. Brown a power
of attorney. Mr. Brown was my legal adviser in
many other matters and did this, if I remember
right, as a friend.

XQ209. What was the object of having legal ad¬
visers for both sides present at this conference,
if its only purpose was to discuss the advisability
of your making a connection with Latham?

A. I give it up, presumably, however, to come to
some definite understanding that if I did leave, I
should be provided for.

XQ210. I understand that before the supplemen- 519
tary roller on the upper sprocket wheel which you
suggested was added, the film came straight down.

Is this supplementary roller shown on the sketch
Lauste made in this case?

A. Yes.

XQ211. It is the uppermost roller of the sketch,
is it?

A. Yes.

XQ2I2. And before this, the film was only en¬
gaged by one. tooth on the upper sprocket, is that

A. One or two teeth.

XQ213. Ami that put too much strain on these
perforates and frequently resulted in tearing the

A I remember running through a long piece o

jmffiTt •” f6"' dnys i,1'ior tlle GHffo-Bar-
net fight and i seemed to run very satisfactorily
untd there would be a little slack. When this wm
taken up a slight jerk would take place and or
examination, I noticed a roughness in one or twe
of the perforations. This, however, did not depre-
mate in any way that I could see, the results.
I, however, thought it advisable when trying this

urthei along towards the upper center of the
sprocket wheel to place at this particular point a

not?// b? °1' S°IUe otIler soft material, I do
not ust remember which, grooved out on the sides
to allow the spocket teeth to enter. The result

as i nfl 'r "T SiWply t0 atM “ fc* more teeth
as an additional precaution against any possible
danger of roughness on the edge of the fiL per

ZrTu A/?! know^if this was absolutely es-
sential but it had its use.

XQ214. What do you know ns to Latham’s fi-
tbe period —

"as a matter X had nothing to do with

XQ215. The discnssions° betweeT you relative
to your joining the Lathams, did not brin- out
any expectations on Latham’s part that you would
financially contribute to the enterprise, did Thev’

175

- K. L. Dickson,

XQ21C. Did you and Latham ever discuss -not
outing the camera which you saw?
t'Z°’ not t0 ffly recollection.

XQ-17. Is there any other error that you can

U took the swinging light picture pres

n U1 G deffad<,itral 101161 that yoa

«nd the different path of the film produced there-
ont'thfnVlklC?lirn(3ed T l0°ks aI1 ri^t. The

the7upp?rSor arn?eN er/b°Ut “ iS iUsi ™

XQ218. What do the letters K. M. 0 D in tha
name of your syndicate indicate’ ' ' “

man ? < 1 * E. B. Koop-

L. DicSon ’ Heman Casler and W. K.

v*Xr 2?' At the time °f the testimony in Latham
fact ^

m a general way, the character of “ d

involved therein9 * lnvention

in Orange? ' °f y°W Wife at house'

A- ^hnt I should that day leave Mr. Edison and

[PHOTOCOPY]

_ William K. L, Dickson. _

work with them in developing a taking machine on
the lines of the Edison so-called kinetograph, not
that I really think tlint Mr. Woodville Latham, to
do him justice, wished me to divulge anything I had
been doing for Mr. Edison but wished to have an
apparatus under their control that they could make
films for exhibition purposes. It was modified, of
course, to what I have already stated, and in fact,
it was tlie only thing to be done, namely, to get
Mr. Edison to supply these films for this particu¬
lar exhibition purposes.

XQ221. Please state all that yon can remember
that was contained in the letter which you received,
and as a result of which yon visited the shop and
photographed tlie swinging light?

A. I cannot bind myself to the exact wording
but the sense of the letter was to the effect that I
should come at once, as they believed they had
something fine and I must see it. It was a jubilant
epistle and so I went.

XQ222. Didn’t the letter mention that it was a
camera they wanted to show you?

A. I do not think so. I do not think there was
any description. I naturally knew or inferred that
it was the camera; as stated before I was aware
that they were working on such a device, although
I had never seen it in detail. In fact, I purposely
kept away at one of the visits from looking at the
construction. Upon that evening, however, the
the whole thing was explained and shown me.

XQ223. Didn’t you go over expecting to be shown
a camera?

A. Naturally. The purport of the letter indi¬
cated that they wished to show me something fine
or good, whatever the words were.

Adjourned to Friday, April 14, 1911, 10.30
A. M.

_ _ William K. L. Dickson. _ ^

New York, April 14, 1911,

10.30 A. M.

Met pursuant to adjournment.

Present: Counsel as before.

Cross-examination of MR. DICKSON continued :

XQ224. Did you ask the Lathams or any of them
to choose the location for a shop as near as prac¬
ticable to the ferry connecting with the trains for
Orange or something to that effect? 530

A. No, decidedly not. This was proposed to me
by Mr. Woodville Latham as being more convenient
for me to come over and see their work and help
them. This, of course, is another of those garbled
and vindictive statements made in the testimony of
that gentleman and which I am here to confute
whenever I can.

XQ225. Before the night of the swinging light,
did you see any efforts made to project pictures
with a machine of the same general character as
the machine used to take the pictures of the swing¬
ing light or with that same machine at the Frank¬
fort Street shop? 631

A. No.

XQ22G. Did you supply any film for that pur¬
pose or for any purpose in January or February
1896, to the Lathams or anyone connected with
them?

A. No, decidedly not.

XQ227. Did you find Otway Latham and Gray
Latham or either of them skilled as mechanics?

A. No, but Mr. Otway appeared to be very
handy. .

XQ228. When yon visited the Latham shop be-

—4 -

[PHOTOCOPY]

ITS

532 _ 'William K. L, Dickson.

fore the night of the swinging light pictures, was it
quite a frequent occurrence that Mr. Woodville
Latham would not be there?

A. As I -went purely and alone on Mr. Wood¬
ville Latham’s invitation, with possibly occasional
invitations from Otway Latham, I would find the
invitors always there, except on the night of the
lamp test when Mr. Woodville Latham was ill or
indisposed. • ’

XQ229. At the time of these various visits, do
you know whether Mr. Otway Latham knew you
were working with Mr. Edison upon photographic
•machines? *

A. Decidedly, since he and his people bought
kmetoscopes which they had on exhibition some;
where in the city.

XQ230. On April 2nd, 1895, did you consider
•Latham obligated to you in any way?

A. No, not in any way.

XQ231. How about any earlier period than
that?

A. The same answer applies as naturally X could
not charge them for erecting the Edison kineto-
634 scopes at their exhibit as X was paid to do this bv
Edison. J

XQ232. Did you meet Gray Latham and Otway
Latham or either of them at any time at the Labor¬
atory of Mr. Edison?

A. Yes, in the early part of 1894, they came to
Mr. Edison’s Laboratory to purchase some kineto-
scopes for exhibition purposes. It was then that
I met them for the first time and possibly three
times after that during this deal.

XQ233. Did you ever tell either Gray Latham or
Otway Latham at Edison’s Laboratory that you

were the real inventor of the kinetoscopo,
suggested the idea to Edison?

A. To the best of my recollection, I hardly
even if I had been the inventor, so-called. w*VI i'
have been policy to have made such a statement to
utter strangers. I am confident, however, that this
is another spiteful dab.

XQ234. Are you positive in your recollection that
there is no basis whatever for any such statement
as this?

A. I can state emphatically that I haw not the
slightest recollection of any such conversation.

XQ235. Gan you swear positively that you did
not make any statement of this character to either
of the Lathams at the Edison Laboratory?

Mr. Page: Objected to as irrelevant and
immaterial, as, if the witness is testify'11?
to the best of his recollection, it is
immaterial how he answers this question.

A. As stated before, I have no recollection of
making such a statement, and I am inclined to
believe, to the best of my knowledge, the conversa¬
tion did not take place or was turned and twisted 637
for a purpose.

XQ23G. You do recollect, however, do you not,
that at the Edison Laboratory, you did express to
one of the Lathams your displeasure at not having
received the credit due you for the work in moving
picture lines you had done with Edison?

A. This question is in keeping with the Iasi and
tends to show that there was some hidden object it'
making these various statements. I again, will
most emphatically state that I have no recollection
of such conversations especially with men that X
kne.w nothing about.

[PHOTOCOPY]

Dickson.

XQ237. Do .you remember whether or not in
your conversation with Gray or Otway Latham at
the Edison Laboratory you suggested or intimated
that an association with them in the kinetoscope
business would be more pleasing to you than as¬
sociation with Edison?

A. I think on the face of it, this would he utterly
absurd, considering the number of years I had been
so delightfully associated with Mr. Edison and
that my work was so highly congenial to me in
every respect. I was head of the electrical mining
639 department ns well as the head of the kinetoscopie
and kinetograpliic moving picture department and
tin's should he answer enough to show the ridicu¬
lous and I again use the word, vindictive nature of
the series of statements.

XQ238. Do you remember that Otway Latham
and Gray Latham asked you if you would he will¬
ing to join with them in their work and that after
some hesitation you agreed that you would talk the
matter over with your wife and give a definite an¬
swer at a later time?

A. Quite right. This, however, has been ex-
540 plained in previous answers and questions.

XQ239. Did you see any JS94 or 1895 drawings
made by Lauste for cameras or projecting machines
or parts thereof?

A. I saw several sketches lying around on table
and bench, hut was particularly careful not to in¬
spect same, for obvious reasons.

XQ240. The reasons may be “obvious,” but in
all this deposition, I have been unable to find any¬
thing that explains why your reasons for not ex¬
amining these drawings and apparatus in process
of construction did not equally apply to prevent
you when you received a letter from Otway Latham

181

_ 'William K. L, Dickson. _

from which you understood that a moving picture
camera had been completed, ready .for your in¬
spection, from visiting the shop and obtaining the
exact information as to that camera. Do you de¬
sire to explain any further?

Counsel for complainant suggests that this
may be due to a lack of perception on the
part of Defendant’s' Counsel and not such
an inference as others might draw from the
testimony and therefore objects to all but
the interrogative portion of the question as
irrelevant and immaterial.

A. The matter is as simple as A B C, and I have
endeavored throughout this testimony to various
answers and questions to show that I was particu¬
larly careful as long as I was not associated with
the Lathams, as a matter of honor, to probe and
unduly examine into their work. The same thing
applied to the fact that I was scrupulously careful
not to divulge anything that was going on at Mr.
Edison’s laboratory and it was not until I was in¬
vited to see the completed camera' on the' night' of
the swinging lamp test that I commenced to see 543
the possibility of joining the Lathams'which even
then was most uncertain. Although this machine
was thoroughly explained and'examined by me, I
felt that even if I did not join I could, of course,
not take any advantage of what I had seen; In
conclusion, would add, as stated before, that this,
was forced on me.

XQ241. In your answer to XQ1C4 you described
the feeding mechanism of the camera used in the
commercial work for producing pictures for the
Edison kinetoscope. Was the horizontal continu-

[PHOTOCOPY]

182

644 _ William IC. L. Dickson.

ous travelling disc yon speak of arranged like the
disc 25 of tlie Edison Patent 12,037, except tlmt it
had one slot instead of six and was the vertical
three toothed disc arranged like the disc 23 of
that patent with relation thereto except that it had
three teeth instead of six?

Mr. Page: Ojected to as irrelevant and
immaterial and as fishing for informa¬
tion, no way pertinent to the questions in¬
volved in this case.

545

A. My explanation or description as given in my
answer 164 is purely from memory, some 22 years
ago, was broadly a description of the action of such
a machine. What I described doubtless was suf¬
ficiently correct for the purpose and perhaps one
of the modifications we made at that time. The
patent drawing entitled “T. A. Edison Kinetoscope
No. 12,037” shows such a modification and looks
quite correct; showing more teeth on the vertical
disc with a corresponding additional number of
slots, in the traveling horizontal disc. The terms

546 horizontal and verti<Sal do not as closely apply to
this drawing as in my rough description from mem¬
ory, although the action is the same.

XQ242. How long a film was used in the Edison
kinetoscope?

A. In the first models, there was about between
25 and 30 feet and later 48 feet.

XQ243. 48 feet was the longest length of film
used on the commercial kinetoscope?

A. Yes.

XQ244. And was the same length or a lesser
length used on the camera when taking pictures
for the kinetoscope?

183

_ _ William K. L, Dickson. ^

Mr. Page: The objection heretofore made
to Counsel for Defendant using this case
as a fishing excursion for information in no
way necessary or relevant to the issues is
objected to as a gross abuse of the privil¬
eges of cross-examination.

A. It depended somewhat on the subject and on
some occasions two 24 foot lengths were used on
several' subjects and sometimes three subjects pho¬
tographed and joined together to make up the re¬
quired length averaging about 48 feet on the last 548
models, or when the occasion required, a complete
48 length was used in the taking camera developed,
printed, and the positive placed in the kinetoscope
in the form of an endless band.

XQ245. How did the thickness of the film used
in the kinetoscope compare with the thickness of
the film used in kinetoscope projectors, — if you
can, state the thickness of each.

Mr. Page: Same objection.

A. I am afraid this is rather too much of a task.

My distinct remembrance, however, is that the film 549
used in the camera was extremely thin, almost like
paper but very tough. The positive, if I remem¬
ber well, was somewhat thicker as used in the
Edison kinetoscope. I had the pleasure of hand¬
ing in a sample of the Griffo-Barnet positive film
used by the Lathams in their projecting machine
and I think that both the slow emulsion positive
films used in the Edison kinetoscope and in the
so-called Latham kinetoscope projector, were very
much alike as to thickness.

. XQ246. . And as I understand you, the film used

[PHOTOCOPY]

184

' 550 _ William K. L. Dickson, _

in tlie camera was much thinner, that is, the Edison
camera. Is that right?

A. Somewhat thinner, yes.

XQ247. Two thousandths of an inch thick or
thinner?

A. I give it up, too difficult to remember such
exact measurements after so many years. For that
reason I made my answer comparative.

XQ248. How did the color of the film used in
the Latham camera compare with that of Edison
camera?

B5) A. In your question, I presume yon mean the
unexposed film. Nearly all film used from that
time to the present' has a creamy delicately tinted
greenish appearance.

XQ249. Has all the unexposed film from the be¬
ginning been of that color, do you know?

Cross-examination Closed.

Re-direct Examination by Hr. Page:

RDQ250. Have you any pecuniary interest in the
outcome of this suit? v
553 A. None whatever.

Re-cross Examination by Mr. Eyre:

RXQ251. Do you hold stock in the K. M. C. D.
Syndicate?

A. I do not think it can be called holding.stock.

I have an interest or had an interest in this K.
M. C. D. Syndicate, but having disposed of niy hold¬
ings. in all the subsidiary companies, including the
American Biograph & Mutoscope Company, my in¬
terest therefore in the K. M. C. D. wduld naturally
come to an end.

185

William E. L. Dickson.

- - - - - 553

RXQ252. Is the K. M. C. D. Syndicate an incor¬
porated company?

A. No, it is still an agreement of partnership.
RXQ253. Do you mean that your present in¬
terest in the K. M. C. D. Syndicate is one of no
.value whatever?

A. Yes, unfortunately.

RXQ254. The K. M. C. D. Syndicate owns
nothing of any kind, is that it?

A. For many years past, I have received nothing
from the K. M. C. D. and with the exception of the
K. M. C. D. Syndicate holding one or two side 554
lines, which in fact do not know exactly what they
are, anyway, nothing seems to have come of the
side lines, I later, as stated before, sold out my
shares in any company or companies which should
have paid interest in a certain proportion to this
quarter partnership, hence my explanation that
if I held no shares, there could be no division of
interest as far as I was concerned.

RXQ255. How recently did you sell out?

A. About three years ago or maybe more, I sold
out my last holding, namely, the American Muto-
Jscope & Biograph Company shares.

RXQ256. What arrangements were made with 555
jyou as to coming over here to give this testimony?

A. A fee of £300, out of which I should pay my
own expenses.

Deposition Closed.

W. K. L. DICKSON.

Legal Department Records
Motion Pictures - Case Files

Motion Picture Patents Company v.

Universal Film Manufacturing Company et al.

Jesse Isidor Straus et al. v. Victor Talking Machine Company

This folder contains two U.S. Supreme Court opinions of April 9, 1917.
The first pertains to the suit brought by the Motion Picture Patents Co. against
the Universal Film Manufacturing Co. and other defendants for infringement
of Woodville Latham's U.S. Patent 707,934. The second relates to the suit
brought by Jesse Isidor Straus and other plaintiffs against the Victor Talking
Machine Co. Both opinions became legal precedents, barring the license
agreements used by the Motion Picture Patents Co. and Thomas A. Edison,
Inc., to fix prices and otherwise limit the use or sale of their products. Both
opinions contain marginal notations, some probably by Edison.

SUPREME COURT OP THE UNITED STATES.

No. 715.— October Term, 1916.

Motion Picture Patents Company,]

Petitioner, Certiorari to the United States

vs. Circuit Court of Appeals for

Universal Film Manufacturing the Second Circuit. ■

- Company, et al. J

[April 9, 1917.]

Mr. Justice Clarke delivered the opinion of the Court. .

In this suit relief is sought against three defendant corpora¬
tions as joint infringers of claim number seven of United States'
letters patent No. 707,934 granted to IVoodville Latham, assignor, \
on August 26, 1902, for improvements in Projeeting-Kinetoscopes.''
It is sufficient description of the patent to say that it covers a
part of the mechanism used iri motion picture exhibiting machines
for feeding a film through the machine with a regular, uniform
and accurafe movement and so as not to expose the film toexcessive
strain or wear. ' \

The defendants in a joint answer do not dispute' the title of
the plaintiff to the patent but they deny the validity of it, deny*,;
infringement, and claim an implied license to use the patentee!
machine.

Evidence which is undisputed shows that the plaintiff on June
20] 1912, in a paper styled “License Agreement” granted to The
Precision Machine Company a right and license to manufacture and
sell machines embodying the inventions described and claimed in
the patent in suit, and in other patents, throughout the United
States, its territories and possessions. This agreement contains a
covenant on the part of the grantee that every machine sold by it,
except those for export, shall bo sold “under the restriction and
condition that such exhibiting or projecting machine shall'be used

2 Motion Picture Patents Co. vs. Universal Film Mfg. Co. et al.

of the licensor while it owns said patents and upon other terms to
be fixed by tlie licensor and complied with by the user while the
said machine is in use and while the licensor owns said patents
(which other terms shall only be the payment of a royalty or
rental to the licensor while in use).”

The grantee further covenants and agrees that to each machine
sold by it, except for export, it will attach a plate showing plainly
not only the dates of the letters patent under which the machine
is “licensed,” but also the following words and figures:

“Serial No _

“Patented No.

“The sale and purchase of this machine gives only the right to
use it solely with moving pictures containing the invention of re¬
issued patent No. 12192, leased by a licensee of the Motion Picture
Patents Company, the owner of the above patents and reissued
patent, while .it owns, said patents, . and upon other terms to be
fixed by the Motion Picture Patents Company and complied with
by tl)e user while it is in use and while the Motion Picture Patents
pompany owns said patents. ..The removal or defacement of this
plate terminates tlie right to use this machine.”

1'ho agreement further provides that the grantee siiali hot sell
any machine at less than the plaintiff’s list price, except to jobbers
and others, for purposes of resale and that it will require such
jobbers and others to sell at not less, than plaintiff’s list price. The
price fixed in the license contract for sale of machines after May
1st, 19109, is not less than $150 for each machine and tiio licensee
agrees to pay a royalty of $5 on some machines and a percentage of
the selling price on others.

it is, admitted that the, machine, the use of which is charged to
be ah infringement of tlie patent in suit, was manufactured by
The, Precision Machine Company and was sold and.delivered under
its “License Agreement” to the Seventy-second Street Amusement
bompany, then operating a playhouse on . Seventy-second Street,
in New. York, and that when sold it was fully paid for and had
attached toft a plate with the inscription which we have quoted as
required by the agreement. t.

Reissued patent 12,192, referred io in the, notice, attaehed.to the
machine, .expired on August ,31,, i9X4. , The defendant Prague
Amusement Company on November 2, 1914, leased the Soventy-
seebhd Street playhouse f rom, tlie Seventy-second Street Amusement
Company, and acquired the alleged infringing machine as a part

Motion Picture Patents Co. vs. Universal Film Mfg. Co. et al. 3

of the equipment of the leased playhouse. Subsequent to the
expiration of reissued patent 12,192 the defendant, Universal Film
Manufacturing Company made two films or reels, which, between
March 4th and 17th, 1915, were sold to the defendant the Universal
Film Exchange and on March 17, 1915, were supplied to the
defendant Prague Amusement Company for use on the machine,
acquired as we have stated, and were used upon it at the Seventy-
second Street playhouse on March 18th, 1915.

On January 18, 1915, the plaintiff sent a letter to the Seventy-
second Street Amusement Company, notifying it in general terms
that it was using without a license a machine embodying the inven¬
tion of patent No. .707,934 and warning it that such use constituted
an infringement of the patent, and on the same day the plaintiff
addressed a letter to the defendant Universal Film Exchange
notifying it that it also was infringing the same patents by supply!
ing films for use upon the machine of the Seventy-Second Street
playhouse and elsewhere. The bill in this case was filed on March
18,1915.

The District Court held that the limitation on the use of the
machine attempted to be made by the notice attached to it, after
it had been sold and paid for, was invalid, and that the Seventy-
second Street Amusement Company, the purchaser, and its lessee,
the Prague Amusement Company, had an implied license to use the
machine as it had been used, and it dismissed the bill without
passing on the question raised in the pleadings ns to the validity
of the patent. The Circuit. Court of Appeals affirmed the District
Court (235 Fed. 398) and the ease is here for review on certiorari.

It was admitted at the bar that 40,000 of the plaintiff’s mnehines
are now in use in this country and that the mechanism covered by
the patent in suit is the only one with which motion picture films
can be used successfully.

This state of facts presents two questions for decision :

First: May a patentee or his assignee license another to manu¬
facture and sell a patented machine and by a mere notice attached
to it limit its use by the purchaser or by the purchasSPIT lessee, to
films which are no part of the patented machine, and which are
not patented?

Second. May the assignee of a patent, which has licensed another
to make and sell the machine covered by it, by a mere notice at¬
tached to such machine, limit the use of it by the purchaser or by

laucr v. O Donnell,
not to bo doubtful
they really do not

10 Motion Picture Patents Co. vs. Universal Film Mfg. Co. et al.
vention described in tlie claims of the patent and that it is not com¬
petent for the owner of a patent by notice attached to its machine
to, in effect, extend the scope of its patent monopoly by restricting
the use of it to materials necessary in its operation but which arc no
part of the patented invention, or to send its machines forth into the
channels of trade of the country subject to conditions as to use or
royalty to be paid to be imposed thereafter at the discretion of such

12 Motion Picture Patents Co. vs. Universal Film Mfg. Co. et al.

conclusions we have stated in this opinion, is plainly void, because
wholly without tlio scope and purpose of our patent laws and be¬
cause, if sustained, it would be gravely injurious to that public
interest, which we have seen is more a favorite of the law than is
the promotion of private fortunes.

Both questions as stated must bo answered in the negative and
tho decree of the Circuit Court of Appeals is
, Affirmed.

Mr. Justice McReynolds concurs in tho result.

SUPREME COURT OE THE UNITED STATES.

No. 715.— October Term, 1916.

Motion Picture Patents Company, 1 On Writ of Certiorari to
vs. I the United States Cir-

Universal Film Manufacturing Co., [ euit Court of Appeals
et al. J for tho Second Circuit.

[April 9, 1917.]

Mr. Justice Holmes, dissenting.

I suppose that a patentee has no less property in his patented
machine than any other owner, and that in addition to keeping
the machine to himself tho patent gives him the further right to
forbid tho rest of the world from making others like it. In short,
for whatever motive, lie may keep his device wholly out of use.
Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U. S.
405, 422. So much being undisputed, I cannot understand why he
may not keep it out of use unless the licensee, or, for the matter of
that, the buyer, will use some unpatented thing in connection with
it. Generally speaking the measure of a condition is the conse¬
quence of a breach, and if that consequence is one that tho owner
may impose unconditionally, ho may impose it conditionally upon
a certain event. Ashley v. By an, 153 U. S. 436, 443. Lloyd V.
Dollison, 194 U. S. 445, 449. Non debet, cui plus licet, quod minus
est non liccre. D. 50, 17, 21.

No doubt this principle might be limited or excluded in cases
where the condition tends to bring about a state of things that
there is a predominant public interest to prevent. But there is no
predominant public interest to prevent a patented tea pot or film
feeder from being kept from tho public, because, as I have said, the
patenteo may keep them tied up at will while his patent lasts.
Neither is there any such interest to prevent the purchase of the
tea or films, that is made the condition of the use of the machine.
Tho supposed contravention of public interest sometimes is stated
as an attempt to extend the patent law to unpatented articles, which
of course it is not, and more accurately as a possible domination to

Motion Picture Patents Cc

established by such means,
the extent of the desire for the tea pot or film feeder, and if the
owner prefers to keep the pot or the feeder unless you will buy his
tea or films, I cannot see in allowing him the right to do so any¬
thing more than an ordinary incident of ownership, or at most, a
consequence of the Paper Bag case, on which, as it seems to me,
this case ought to turn. See Grant v. Raymond, 16 Pet. 218, 242.

Not only do I believe that the rule that I advocate is right under
the Paper Bag case, but I think that it lias become a rule of property
that law and justice require to bo retained. For fifteen years, at
least since Bement v. National Harrow Co., 186 XJ. S. 70, 88:93, if
not considerably cnrlier, the public has been encouraged by this
Court to believe that the law is as it was laid down in Heaton-
Peninsular Button-Fastener Co. v. Eureka Specialty Co., 25 C. C. A.
267, and numerous other decisions of the lower Courts. I believe
that many and important transactions have taken place on the faith
of those decisions, and that for that reason as well as for the first
that I have given, the rule last announced in Henry v. A. B. Dick
Co., 224 U. S. 1, should be maintained.

I will add for its bearing upon Straus v. Victor Talking Machine
Co., that a conditional sale retaining the title until a future event
after delivery, has been decided to be lawful again and again by this
Court. Bailey v. Baker Ice Machine Co., 239 TJ. S. 268, 272. X
confine myself to expressing my views upon the general and im¬
portant questions upon which I have the misfortune to differ from
the majority of the Court. I leave on one side the question of the
effect of the Clayton Act, as the Court has done, and also what
I might think if the Paper Bag case were not upheld, or if the
question were upon the effect of a combination of patents sueli as to
be contrary to the policy that I am bound to accept from the
Congress of the United States.

SUPREME COURT OE TIIE UNITED STATES.

No. 374.— October Term, 1916.

Jesse Isidor Straus, etal., Petitioners,! Certiorari to the Circuit
vs. I Court of Appeals for the

Victor Talking Machine Company.] Second Circuit.

[April 9, 1917.]

Mr. Justice Clarice delivered the opinion of the Court.

If will contribute to brevity to designate the parties to this
proceeding as they were in the trial court — the respondent as
plaintiff and the petitioners as defendants.

The plaintiff in its bill alleges : that it is a corporation of New
Jersey; that for many years it has been manufacturing , sound-
reproducing machines embodying various features covered by
patents of which it is the owner, and that, for the purpose of
marketing these machines to the best advantage, about August
1st, 1913, it adopted a form of contract which it calls a “License
Contract” and a form of notice called a “License Notice,” under
which it alleges all of its machines have, since that date been
furnished to dealers and to the public.

This “License Notice" which is attached to each machine and
is set out in full in the bill, declares that the machine to which it is
attached is manufactured under patents, is licensed for the term of
tho patent under which it is licensed having the longest time to run
and may be used only with sound records, sound boxes and needles
manufactured by the plaintiff ; that only the right to use the machine
“for demonstrating purposes” is granted to “distributors” (whole¬
sale dealers), but that these "distributors” may assign a like right
“to the public” or to "regularly licensed Victor dealers” (re¬
tailers) “at the dealer’s regular discount royalty”; that the
“dealers” may convey the “license to use the machine” only
when a “royalty” of not less than $200 shall have been paid, and
upon the “consideration” that all of the conditions of the “license”
shall have been observed ; that the title to the machine shall remain

6 Sl™setal.vs. Victor ralkin!r Machine Co.
with the possession of it; that it is not t»i» i
( tracing and keeping the plaintiff b USOd M a basis fc

A use of the machine, for no renort of ^ 03 to the c°ndition e
/ ,lho ^ultima^.. arf terl h.Lf^'Tt^ required fror
notwithstanding its apparently s*iX7 thoatlPulatcd price; thai
word “sale- and its“£ °f 7°, US° of «*'

most obvious requirements for securing a JotiAtf/0^ ,US°’”
the restrictions of the notice as to “i, » a °° a onforcement oi
by its own terms, the title to th. m„°i ,arc °«ntted ; and that, even
"ultimate users,” without further payment “ VCSts in the

except patiently waiting for patents to“wire on •1°D ?• tbeir part-
eo far as this notice shows, may or ivT “VOntlon3' which,
j machine. There remains for this “r?,/ *7 lnCOrporated in the
discover, the function only of “ &r 118 we can

I Plaintiff's machines to its agents and to *• P^e of

V cannot doubt is the purpose for wl,i l V , P"bhc' and tws we
Courts would be nerveiwlvVr '7*7 reaI ^ was designed,
eueh an attempt ns this "L,“ense nSc”"^ *° l0°k tbr°neh
sell property for a full price, and vet^o nf "S pl“in* is to

hf F SSKi

scheme of distribution is not ,S t°,t‘.° PnM“» interest. The
Plaintiff and to the public a reasonahT deS,f?d to “cure to the
tile grant of tile patent laws but is in w °f ltS machines, within
price-fixing enterprise, ,’S ill* *2 "l*™ “nd in fa“ a more
widespread injustice to innocent puiehS foT> W°rk ",,d

mzed that not one pimdmscr f 14 must bc rccog-

and that ^°t'onelir^^ml^reS^^^r^~TA^^~St,i!'^-~£2Ei™>
1101 n,,mh"” -fjie did renrlif

oIoar its real meaning ”nd pm™se° “■“•‘'than to mafe

•terms to call the transaction Intended to 1,"°“ f v ° pcrvcrsion 01
Of marketing plaintiff's machines 1 “MeenseTo ?. I,1"-*'"8 SySte“
Bmcr v. O'Donnell, 229 U S 1 IP ‘ SC the invention."

Convinced ns wo are «,„/« ' ’

Notice" Of plaintiff, eonS*dasS 17 °f this “^nse
its product, is not to secure to tl» l“ ltS scllcme for marketing
and as is contemplated by the patent's? t “S° °f its machines,
poorly-concealed purpose is to restrict « “’• bUt tllBt its reaI “ml
plaintiff had been paid for ST2?

Straus et al. vs. Victor Talking Machine Co. 7

the possession of dealers and ofjlm imbUe, we conclude that it falls
within the principles oF Adorns v. Burlee, 17 Wall. 453, 4 ,

and of Tinner V. O’Donnell. 229 II. S, lj. that it is, therefore, invalid,
and tkoTthe District Court properly held that the bill must fail

’it^ults^thaT'the decree of the Circuit Court of Appeals
, _ .1 n,»t flic District Court affirmed.

Legal Department Records
Motion Pictures - Case Files

Richard F. Outcault v.

Edison Manufacturing Company and Percival L. Waters

This folder contains material pertaining to the suit brought by cartoonist
Richard F. Outcault against the Edison Manufacturing Co. and Percival
Waters of the Kinetograph Co. in the U.S. Circuit Court for the Southern
District of New York. The case was initiated in April 1904 and involved the
alleged infringement of Outcault's copyright for his Buster Brown cartoon.
The selected items include an Outcault cartoon and a description of a motion
picture based on the cartoon, along with the bill of complaint and affidavits by
Waters and Edwin S. Porter. Among the items not selected are the
defendants' demurrer to the bill of complaint, the motion for dismissal, letters
and memoranda pertaining to the progress of litigation, and documents that
duplicate information in selected material.

The Kinetograrh Company

Characters and scenes in Buster Brown picture.

1st. scene,

4th. scene

5th.

Outcault making a sketch of Buster

Busters Revenge on the Tramp. Buster, Cook, & Tramp,

Buster & the Dude. Buster, 2 young Ladies, Young Man with
a dog, Tige. I ,

Buster makes room for his Mama at Bargain Counter. Salesman,
a number of young ladies, Buster comes in with Tige and
Mama, Tige sits on stool, Buster whispers to Tige.

Busters Joke on Papa. Kitchen scene, Cook, lobster Man,

Mama, Buster, Tige. Bed-room scene, papa sitting in chair,
Papa goes out, Buster comes in with Lobers puts them in
Bed, papa comes back goes to bed, in comes Buster and Mama
another scene, Buster eating with Mama |J,LA-L'5—

UiTsEers Dog to the Rescue. Cook, Buster, Mama and Tige.
Cooks puts CruHllers on shelf, Buster tries to go up by
ladder, Mama comes in, ties Buster to chair, tige comes in
climbs ladder and gets crullers and eats with Buster.

Buster & Tige put a Baloon Vender out of Business. Mama,
Tige, and Bustfer, four other Dogs, Balloon Man. Balloon
man walkingnin street, Mama & Buster come along, Buster
bunks into Balloon man, and is. struck by the latter, then
in runs tige and jumps at the Balloon man and four o'.her
gogs . end .

0-.3

Circuit Court of the United States.

, :

Southern District of Now York.

In Equity.

)

Richard F. Outcault, )

Complainant , )

against ) Bill of complaint.

The Edison’ Manufacturing Company )

■j >

)

i Circuit Court of tlie United States,

defendants. )

for the Southern District

of New York,

To the judges of the Circuit Court of the United

Richard F? Outcault,

; /

States for the Southern District of New York, in the Equity

; Complainant,

Circuit .

v. '

Richard F. Outcault of Flushing, Long Island,

l| The Edison Mfg. Co. et. al.

t^r.K-r

and a citizen of the State of New York, brings this bill

Defendants.

against The Edison Manufacturing Company, a corporation

organized under the laws of the State of New Jersey, and

Fercival L. Natters, doing business in the City of New York

■

1 (Copy.)

Bill of Complaint.

under the name, firm and style of The Kinetograph Company,

and thereupon your orator complains and says:-

That Richard F. Outcault is a citizen of the

United States and is the true and original author , designer

and proprietor of a series of pictures, sketches and car¬

toons collectively designated and known by the name and

■ *jtsJ

title of " Buster Brown" , which said design, sketch or car¬

toon was not known or used by others, before the origin,

invention, discovery and design thereof by the said Richard

F. Outcault.

That the said Richard F. Outcault on or about the

25th day of May, 1902, before an application for a copy¬
right on said name, design, picture and cartoon of Buster
Brown, had been made, for valuable consideration duly as¬
signed his right, title and interest and license to manu¬
facture, use and vend the said article etc. to the New Yorlc
Herald Company.

That the said New York Herald Company thereupon
afterwards before publication did deposit in the mail ad¬
dressed to the Librarian of Congress, at Washington, Dis*r;>
trict of Columbia, a printed copy of the title of the de-
sign, picture, sketch or cartoon known as Buster Brown,
and within ten days of the publication thereof, did deposit
in the mail addressed to the Librarian of Congress, at
Washington, District of Columbia, two copies of such copy¬
right article.

That the Librarian of Congress duly recorded tho
name of such copy right articles, in a book kept for that
purpose, and duly received his fees for the same, and tho
New York Herald Company having fully and in all respects
complied with all requirements of the law in that behalf,
and within ten days after its publication having filed two
copies of said design, sketch, or cartoon, known as Bustor
Brown, with the Librariad oil Congress who duly issued his
certificate of Copyright of the said (in or about the 25th
day of May, 1902, and on or about the said 25th day of May
1902, and by virt«ie thereof the said New York Herald Com¬
pany became and were the sole owners of all the rights
and privileges granted and secured in or intended to be se¬
cured In and by said copyright, as by reference to the

certi Cl cate thereof will more fully appear.

And your orator further shows unto your Honors
that on the 1st day of October, 190?,, the said Hew York
Herald Company by theirmassignraent of that date duly ex¬
ecuted, for valuable consideration, conveyed to your or¬
ator all their rights, title and interest in and to the
design, sketch and cartoon secured by the said copyright
and with the exclusive rights and license therein to man¬
ufacture use and vend the copy righted articles, during
the unexpired term of said copyright, and of all extentionc
and renewals thereof, as by the said instrument here in
court to be produced, if required, will more fully appear.

And your orator further shows that he is in tho
full enjoyment of the rights and interests acquired by him
as aforesaid, and that said rights and interests have boon
and are of great value to your orator, and your orator is
entitled to all the damage occasioned by the infringements
of the said copyright by the manufacture, sale or use of
the name, sketch/ design etc. , known as Buster Brown, mado
in violation of the said copyright and is by law, entitled
to sue for, and receive the same to his own use.

And your orator further shows unto your Honors,
that he believes, and therefore charges the fact to be that
he, the said Richard R. Outcault, was the originator and
first designer, sketcher and cartoonist ofthe name, sketch,
and design, copyrighted by him as aforesaid, and known as
Buster Brown, and described and claimed in the said copy¬
right a s aforesaid, and that the same was not known or use is

by any other persons before the authorship and origin by
him, the said Richard V? Outcault.

And your orator further shows unto your Honors,
that since on or about the 14th day of March, 1904, the
defendants w411 knowing the premises and the rights and
privileges secured to your orator, the said Richard F. Dut-
cault, by the said copyright, but contriving to injure
your orator and to deprive him of the profits, benefits
and advantages which might otherwise have accrued to him at

the city of New York, within the District aforesaid, and
at other places, have unlawfully and wrongfully made or use
or sold ordexhibited, and are now unlawfully and wrong¬
fully making or using or selling or exhibiting large quan¬
tities of machinery, contrivances, films etc, for the ex¬
hibition of pictures, sketches and cartoons of Buster
Brown, so copyrighted by the New York Herald ?oandrg§ signed

to your orator, and also making using or selling large
quantities of pictures, sketches and. cartoons, known as
Buster Brown, and (described and claimed) in said copyright,
and for tho purposes specified in said copyright, and in
violation of the exclusive privileges therein and thereby

granted to your orator as aforesaid, and in infringement of

said copyright, and of the claims therein contained; but
what quantity of the things copyrighted, produced as here¬
inbefore referred to , the said defendants have made or
used or sdld, or exhibited your orator does not know and
cann ot state, but upon information and belief your orator
avers that they have made or used or sold large quantitios
e, and are now making or using or selling largo

of the f

quantities of the same and that they have derived and re¬
ceived and ares till deriving and receiving, from such man¬
ufacture, ’.ise and sale great gains and profits, but to what
amount your orator is ignorant and cannot set forth, but
your irator believes the same to be the full amount of
five thousand dollars, and so charge the fact t be, and
prays that the defendant may be required to make a dis¬
closure of all such gains and profits-

And your orator further avers that the defend¬
ants continue to make or use, or sell or exhibit such pic¬
tures, sketches and cartoons and designs of Buster Brown,
and machinery, contrivances, films etc, for the manufac¬
ture, use or sale of the same, and refuse though warned and
requested, to desist from such manufacture, use and sale,
and exhibitions, or to pay to your orator such gains and
profits, by means whereof the defendants have injured and
are still greatly injuring your orator, arid have deprived
and are still depriving your orator of, andhave prevented
and are still preventing your orator from receiving the
gains and profits from the use of the exclusive right to
use the pictures, design, sketch and cartoon known as Bus¬
ter Brown, claimed in said copyright which your orator
otherwise and but for the said wrongful acts and infringe¬
ments of the said defendants would have obtained and re¬
ceived.

And your orator prays that the said defendants
may be compelled, by decree of this court, to account for a
and pay over to your orator all such gains, profits as have
accrued or arisen to, or been earned or received by the de-

fenrlants, or to which they my be entitled by reason of
such unlawful manufacture and use and sale and exhibition
by them of such pictures, sketches, carto-ns and designs,
manufactured in accordance with the designssof said copy¬
right, and all such gains and profits as your orator would
have received but for the said unlawful acts and doings
and infringements of the said defendants.

And may it please your Honors, the premises con¬
sidered, to grant unto your orator the writ of injunction
issuing out of and under the seal of this Honorable court,
or issued by one of your Honors according to the form of
the statute in such case made and pi’ovlded, perpetually
enjoining and restraining the said defendants, their clork:
attorneys, agents, , servants, workmen and employees, from
directly or indirectly, making or using or selling or exhib¬
iting to others any pictures, sketches, design or cartoon
of Buster Brown, described and claimed in the said copy-
rlght, or any machinery, contrivance or film for the man¬
ufacture of any picture, design or cartoon known as Bus¬
ter Brown, as d e s cribed., in~sai d— copyright,.

And may it please your honors to grant to your
orator a provisional or preliminary injunction issuing out
of and under the seal of this honorable court, enjoining a:
and restraining the defendants, their attorneys, clerks,
agents, servants, workmen and employees, and each and evorj
of them during the pendency of the suit and to the same
purport, tenor and effect herein before prayed for in re¬
gard to said perpetual injunction.

And that your orator may have such further or
other relief fin the premises as the nature of the cir¬
cumstances of this case may require ancl to this honorable
court may seem meet.

And may i t please your honors to grant unto your
orator a writ of subpoena of the United States of America
issuing out of and under the seal of this Honorable Court,
directed to the said defendants, commanding them on a day
certain therein to be named, and under a certain penalty
to be and appear in this Honorable Court, then and there
to answer all and singular the premises, and to stand to,
perform and abide such further order, direction and decree
as may be made against them.

And your orator aslln duty bound will ever pray &
Leon Raunheim: ,

Solicitor for complainant.

Leon Raunheim,

Of counsel for complainant.

United States of America.

Southern District of Hew York. SS:-

Richard F. Outcault, being duly sworn, deposoth
and saith that he is the complainant in the foregoing bill
named, and has read the same, and knows the contents there¬
of. That the said bill is true of his own knowledge ex¬
cept as to those matters which are therein stated to bo on
his information and belief, and as to those he believes it
to be true.

Sworn to before me this 30 day of

April, 1904. R. P. Outcault.

J. Sherman Moo 1 ton,

Notary Public 187 N. Y. County.

(Seal. )

(Endorsed. )

Circuit Court of the United States. Southern
District of New Yok. Richard P. Outcault, complainant,
against The Edison Manufacturing Company and Kinetograph Co.
Company, defendants. Bill of Complaint. Leon Raunheim,
solicitor for complainant, 38 - 44 Court Street, Brooklyn,
N. Y. U. s. Circuit Court. Piled May C, 1904. South¬
ern District. New York. John A. Shields, Clerk.

Outoault' vs. Edison Mfg. 0o«

J. R.^SchermerhOrn , Esq,,

^j/1 Edison Manufacturing Co,

\ ' n Your favor of | the 7th inst, haB been received with
let/ter and. enclosure from Mr. Dolheer, and 1 am giving this matter
proper attention^,

/j I. lii> view of, Mr. Outcault's apparently unfriendly pos-
it^nTand of hijs; failure to appreciate the disinterested nnturte of
our efforts to1 ^relieve him of embarrassment , 1 advised Mr. Moore
tO/go ahead w^Lth the "Buster Brown" f lifts. I requested |pim, how¬
ever, to withhold the sale of the "Buster Brown in a Department
-Store" film' until I could compare it with the original copyrighted
picture. -To thiB end, I asked Mr; Porter to have Mr. Smith make a
photograph "o f the original Outcault picture in the New York Herald,
and I am daily expecting thiB in order that I can compare the pic-

Youtb very truly,

■sxri '/m. , ; ■

RICHARD E. OUTCAULT,

Complainant,

. = . against . . .

THE EDISON MANUFACTURING COMPANY
and PERCIVA1 L. WATERS,

Defendants.

(Copy)

AI’EIDAY.IT,...OE....PERCiyAL.„.L......WAT.ERS.

FRANK E. BRADLEY,

CIRCUIT COURT OE THE UNITED STATES,

SOUTHERN DISTRICT OE NEW YORK.

. *

RICHARD E. OUTCAULT , )

Complainant, )

)

- against - )

) IN EQUITY.

THE EDISON MANUFACTURING COMPANY )
and PERCIVAL L. WATERS, )

Defendants. )

)

UNITED STATES OE AMERICA )

STATE OE nm YORK ) BB.

COUNTY OE I'UW YORK. )

PERCIVAL L. WATERS, being duly sworn , on oath
states that he is one of the defendants herein; that his
business is that of selling machines, films, eto. for moving
pictures und exhibiting moving pictures; that ho has a
place of business located at 41 East 21st Street, New York
City; that he purchases his said goods from the Edison
Manufacturing Company; affiant states that he has read the
bill of complaint filed herein and denies that he has ever
copied or attempted to copy or made any colorable imitation
of the alleged copyrighted article described or attempted to
be desoribed in the said bill of ooraplaint; he also denieB
that he has ever made, used or sold or exhibited any
machinery , contrivances, film, eto., for the exhibition of
piotures, sketches, cartoons alleged to be copyrighted in
said bill of complaint, nor is he now making, using or
selling any pictures, sketches, and cartoonB described and
claimed in the alleged copyright mentioned in said bill of
complaint ;

Affiant further states he has read the affidavit of

: plaintiff filed herein dated April 30th, 1904; he denies

. that the said Rising therein mentioned ever was v. i

h.ls agent

- 2 -

or in his behalf approached plaintiff for the purpose of
making any representations whatsoever, nor did affiant have
any knowledge of the faot that the said Rising was going to
see plaintiff at the time;

Affiant also denies that ha ever admitted to
plaintiff that any arrangements whatever had not been made
with Mr. Raymond as alleged in the said affidavit; in fact,
the first intimation affiant had that there was any one by
the name of Raymond connected in the matter, oame from
plaintiff himself at a conversation had about the first of
April with plaintiff when affiant learned for the first time
that there was such a person by being told of the fact by
plaintiff himself.

Subscribed and sworn to )

)

before me this 20th day )
of May, 1904. )

J}[. (Z.

CIRCUIT COURT OF THE UNITED STATES,
SOUTHERN DISTRICT OE NEW YORK.

IN EQUITY.

CIRCUIT COURT OE UNITED STATES
SOUTHERN DISTRICT OF NEW YORK.

RICHARD F. OUTCAULT,

Complainant,

. j= . against . — . .

THE EDISON MANUFACTURING COMPANY
and PERCIVAL L. WATERS,

Defendants.

.. AFFIDAYI T....OF....EDWIN....S .....PORTER ...

FRANK E. BRADLEY.

ATTORNEY AND COUNSELLOR AT LAW,
DUN BUILDINQ, Q90 BROADWAY,

RICHARD F. OUTCAULT, )

Complainant, )

- against - )

THE EDISON MANUFACTURING COMPANY )

and PERCIVAL L. WATERS, )

Defendants . )

)

-i

IN EQUITY.

i UNITED STATES OF AMERICA )
n STATE OF NEW YORK ) SS.

COUNTY OF NEW YORK ) !

EDWIN S. PORTER, being duly sworn, on oath
! states that he is employed by the Edison Manufacturing
;! Company, one of the defendants herein as a Photographer to
j! take pictures for the Kinetosoope; affiant states that he j
j| has read the Bill of Complaint filed herein, and of his
| knowledge, and he be lieves he is iB a position to know it to
j! be a fact, that the said Edison Manufacturing Company have
jl never copied or attempted to copy or make any colorable
jj imitation of the alleged copyrighted article described or
attempted to be described in the said Bill of Complaint, and
ax that they havenever made, used or sold or exhibited any j
machinery, contrivances, film, etc. for the exhibition of
pictures, sketches, cartoons alleged to be copyrighted in
said bill of complaint, nor are they now making, using or
selling any pictures, sketches, and cartoons described and
claimed in the alleged copyright mentioned in said bill of
complaint ;

Affiant further states that he has read the affidavit
of plaintiff filed herein dated April 30th, 1904, and denies
the statementtherein made that the said Will S. Rising
referred to was an agent of the Edison Manufacturing Company;
affiant states that the said Rising had been employed by him

j and aot

I to pose^in various pictures from time to time,and that one
I day said Rising suggested to affiant that as he was an uncle
of the said plaintiff he might he able to. secure plaintiff's
consent to the construction of a"Buster Brown" film; the
suggestion arose with the said Rising and affiant told him
if he could obtain this, it might be worth his while;
thereupon, Rising went away and returned shortly with a
communication in plaintiff's handwriting of which the fol¬
lowing is a copy:

"Wednesday

"March 2nd 1904

"Mr. Ed Porter

"Manager Kinetograph Co.

"Dear Sir

"You have my permission to use Buster Brown on
"the machine- and I will be in early next week and pose
"for you in the aot of drawing Buster if you like.

"Most Sincerely Yours,

"R. E. Outcault"

Up to this time, affiant never had heard of any one
by the name of Raymond in this matter, nor did he know that
there was a "Buster Brown" show on the road; a few days
thereafter, plaintiff, on his own suggestion, came to
affiant's gallery and posed for the opening scene of the
"Buster Brown" film; several conversations were had with
plaintiff in which plaintiff expressed not only his willing¬
ness but his pleasure over the idea of having the film
publicly exhibited, not only for the advertisement of the
character of "Buster Brown" but also for whatever advantage
there might be in it to the said Rising; plaintiff said
among other things on more than one occasion that Rising was
in financial difficulties and that whatever Rising got out
of it, he would be satisfied with;

Affiant further stateB that the film axdx thereupon

- 3 -

was made up and perfected and exhibited to the public with the
knowledge and permission of the plaintiff, the said
representations as shown on the screen being original in
idea and entirely dissimilar in every respect, not only as
to characters, scheme, etc., from the alleged copyrighted
article mentioned in the said bill of complaint.

Subscribed and sworn to )
before me this 20th day )
of May, 1904. )

///.

notaky pubuc,

COUNTY Of NEW YORK!

Memo, for Waters' .Affidavit

" After that understanding that Rising was posing in
moving pictures for the Edison company, something was later
said about his having made an arrangement with Outcault for
the making of a series of "Buster Brown" pictures. The idea
of a "Buster Brown" film originated with Porter and Rising
suggested that he could get Outcault' s permission on account
'of his relationship. No knowledge was had at this time by
either Waters or Porter that Outcault had parted with any of
his rights whatever that were in the name "Buster Brown"
or the copyrighted cartoons. (It was Rising’s own idea of
going to Outcault to get the permission) . Porter suggested
to Rising that he would make it worth his while if he got the
permission from Outcault.

"The next I heard of the "Buster Brown" pictures
was one day when Mr. Outcault came in my office and said that
he had just been up i>n the Gallery posing for the opening
i strip of the "Buster Brown" film (Ascertln this date). He
was very much interested in the natter and suggested that he
would be very glad to do anything for the Edison people that
he could in posing for pictures. He said he expected no
compensation for himself — whatever arrangement was made with
Rising was all right. He said the "Buster Brown" subject
; was such a populat one, he had no doubt the pictures would
make quite a hit in the kinetograph and that he would be
| interested to see his own picture. He said if he could get
j up something else later, he would be glad to do it.

The day of thiB conversation was the first time
| affiant had met plaintiff since they had formerly met in
Paris in 1399, and there v/as sort of a talking over of old
times. Outcault also stated that he knew Mr. Edison very
! wel1 and had met him in Pxk± Europe and was personally with
Mr. Edison quite often in Paris, and for that reason he was

- 2 - ''

very glad to Tie c.f any assistance to Mr. Edison or his
interests.

The next thing affiant heard in connection v/ith the
matter was a letter received from Mr. Prank W. Sanger dated
March 28th, 1904. "On the same date, plaintiff called to see
Mr. Porter and dropped in my office stating that he had been
informed ilrac of considerable trouble about the "Bus ter Brown"
pictures; that it would seem he had given the right of these
pictures to some theatrical concern whose name was not then
disclosed by plaintiff. I told him that I very much regret¬
ted any trouble as I felt we 7/ere old acquaintances and it
seemed too bad any false move of his should have been embarr¬
assing to him and that if there was anything in the matter
I could do I would be only too glad to do it, and he then
suggested that I see Mr. Raybond whom he claimed had the
rights from Mr. Sanger (This is the first time affiant ever
heard of Baymond in connection v/ith this matter). I asked
him then , who is Mr. Raymond, and he said he is the one who
has the "Buster Brown" show out and is president of the
Morgan & Wright Lithographing Co. He suggested that I Bee
Mr. Raymond and I told him at the time it was impossible to
get out of the office, but I would meet him later on when I
could. He said he was going to Mr. Raynond’s office
immediately and in the course of a short time would call me
on the ’phone . He said that he had talked with Mr. Raymond
in the mal:ter who was very liberal in his views and was
willing to talk the natter over with the view of effecting
some satisfactory arrangement regarding the pictures so as
not to embarrass him in the contract which he had with
| Raymond. He called me on the telephone a little later and
; said that Mr. Raymond would see me at an hour named.

| Pursuant to that arrangement, I called at Mr. Raymond's office
and talked the matter over with him and he stated that he had
the exclus ive rights from Outcault and that the pictures had
been made without his knowledge, further claiming that his

-3“

rights were being infringed. I asked him if he had any
suggestions to make with regard to the pictures and he said
none whatever, and X then asked him if it were possible for
the owners of the pictures to suggest a royalty basis to
me . He said he would think the matter over and asked me to
call at a later date. X then called by appointment about
two days after. Mr. Raymond stated he had thought the matter
over and decided the pictures mjist not be exhibited. I
asked him to give me this in writing, which he did in the form
of a letter dated April 2nd, 1904. Mr. Raymond told me that
he had exclusive rightB to "Buster Brown" and I then suggested
it was rather queer that Mr. Outcault should have gone ahead
with the arrangement which he had made with Mr. Porter.

Mr. Raymond then laughingly remarked that if Outcault were
up on legal matters he would probably not be a good cartoon¬
ist. X told Mr. Raymond I was very sorry we could not come
to an arrangement so far as I was concerned and that until
the matter was finally adjusted I would give Outcault what
assistance I could in light of the embarrassing situation he
was in between the two parties.

At the time X had five or six sets of the film, and
immediately discontinued the use of them temporarily which
was considerable financial loss.

Affiant further states that he expressly stated to
the plaintiff that he would stop using the pictures as a
matter of courtesy to the plaintiff and not as a matter of
legal obligation; and the same statement affiant made to
Mr. Raymond.

Affiant further states that never at any time did he
cause the said Will S. Rising to make any representations to
the plaintiff or anyone else that the "Buster Brown"
pictures referred to 1b rein were to be used in connection
with Mr. Raymond nor did he ever hear anyone say that the
said Raymond had made such statements until a matter of abbut
two weeks before the date of this affidavit when the said

plaintiff called upon affiant and stated that he understood
that Rising had gotten the privilege for the pictures for
Mr. Raymond's show (Find that date).

In the first conversation with Outcault m commenting
upon the value of the "Buster Brown" pictures, it was subject
of general remark by Outcault, Porter and affiant that the
"Buster Brown" was so prominent before the people there
would be very general sale for the pictures , and the
plaintiff at the time knew it was contemplated that the
films would be used for sale. Outcault asked affiant when
and where the pictures would be exhibited and he was told
it was affiant's intention to put them on in all the
theatres possible as quickly as they were finiehed.

I'W-V'W

'? (( ? ) l & ?

1 (

v .

Memo, for Affidavit of Mr. Porter.

The idea first originated by a man named Anderson
suggesting a scene of a boy stealing jam (Buster Brown then
not thought of). Then Mosier came along with a trains d dog;
assembled boy and dog into jam scene. This led up to
assembling a series of these pictures on different subjects.
Dyer was consulted to see if there was any infringement in
this. Advised later by Dyer than no infringement was made
and they could even use the title. Porter had carefully
abstained from copying any of the original "Buster Brown"
cartoons in his subjects. About five subjects in the
series up to that time. Some time the latter part of Febru¬
ary or first of May, Rising said to Porter, "Dick Outcault
is a nephew of mine, and I think I could get his permission to
use the name "Buster Brown" (This idea had re ver occurred
to Porter before this time). I stated to Rising, "All right"
and that if he could secure permission from Outcault to use
the title, I would make it worth his while. I gave him money
to go to Flushing to pay car fare and expenses. Rising, I
think went over that afternoon or the following day, return
ing with the letter of March 2nd from Outcault, and sals
everything was all right. This is the only letter Porter had
ever received from Outcault. Porter knows writing to be
Outcault's because he has compared it with Outcault' a signa¬
ture on his cartoons.

"I told Rising I was very anxious to wind up a
series of pictures and that awiting until the following Monda
or Tuesday would delay getting them out and X suggested that
I go to Flushing, take my camera and take the picture of
Outcault making a sketch of "Buster Brown', Outcault himself
having suggested that he pose for that, as stated by Rising."

Within a day or two Rising and Porter went over to
Outcault's house and found he waB very buBy. "We had quite a
chat with him in general ard 1b spoke of the "Buster Brown"

shio-w and Raymond, and that was my first knowledge that there
was a "Buster Brown show in existence. He spoke of the
business they were doing, and during our conversation he
said the great trouble with the show was there was not enough
"Buster" in it to please the children and ladies; that the
sucoessof the "Foxy Grandpa" show was that it was confined to
the hoys and grandpa. He mentioned at the time a vaudeville
turn that they used in the play, the six Cuttys; that they
were paying $600 a week for, and it had no haring on the
•Buster Brown' show. I suggested why wouldn't it te a good
idea if the pictures were a success to have Mr. Raymond put
a machine on showing "Buster Brown". He thought it was a
very good idea dnd said he would suggest it to Mr. Raymond.

He then said, "I am very busy, there is a gentlemen Upstairs
for whom I am making a sketch" and he suggested that I come
up with him and wait for Rising who was talking to some member
of the family; Outcault said he could not pose for us that
day, but when Rising returned he said, "Now, I have an
engagement with Pach, the photographer on Broadway, to pose
for a picture on Sunday morning; why can't I kill two birds
with one stone and stop in your pice Sunday.?" The following
Sunday he came there and posed for the picture. After
securing his sanction for using the title, we thought it would
be a good idea to put in one more scene, one of his own, the
Bargain Counter. This is the reason the "Bargain Counter"
scene was added. At this time and at other times there were
conversations with Outcault in which it was thoroughly
understood that defendants were going to market these goods
as they saw fit.

In talking about Rising on the day we called at
Outcault' s home, he said, "Will is in lard luck" and that
he was merely doing this for Will's benefit; that anything
Will got out of it he would be satisfied with. Outcault made
practically the same statement when he called on Mr. Waters.
After the receipt of the first Sanger letter by the Edison
Company, Outcault called at Waters' offioe and Porter was

present, and Outcault made, in effect, the same
that he did this solely for Rising’s benefit in
he might get some benefit out of it. Only the
were present at that time.

statement
the hope that
three named

Legal Department Records
Motion Pictures - Case Files

Triple Damage Suits

This folder contains material pertaining to damage suits brought against
the Motion Picture Patents Co., Thomas A. Edison, Inc., and other licensed
manufacturers by the Chicago Film Exchange, the Theatre Film Service of
San Francisco, and other licensed and unlicensed exhibitors. Most of the
cases were initiated in April and May 1916, after the federal government's
antitrust case against the Motion Picture Patents Co. was settled by decree
in February. The plaintiffs sought triple damages from the defendants under
the provisions of the Clayton Antitrust Act of 1914. The selected items
include correspondence by Edison and by Delos Holden and Henry Lanahan
of the Legal Department concerning the defense and the eventual settlement
of the suits. Among the items not selected are bills of complaint and
correspondence regarding the progress of litigation, legal fees, and legal
representation.

DeiOB Holden, Esq.,

Legal Dept., Thomas A. Edison, Inc.,

Orange, H.J.

My dear Mr. Holclen: —

Confirming my telephone message to Mr. Unger, you
will undoubtedly be pleased to learn that the Chicago Film
Company triple damage suit, the first of all of them to be
reached on the calendar, was put over by Judge Learned Hand
this morning to. the May, 1917 term. He did this because yes¬
terday the Supreme Court set April 9th as the date for the ar-

with

gument of the appeal in the Government case. Of course, this
precedent there can be no question that the remaining triple
damage suits will likewise be postponed, as they are reached,
to the same term.

Incidentally, it is highly improbable that the Gover¬
nment will be ready to argue the appeal in the Government case
on April 9th, so that it is more than likely that there will

no decision by the Supreme Court until next Fall.

Robert. H. McCarter, Ksq., , V, \ \

Prudential 31dg., A \

Newark, M.J. \

My dear Mr. McCarter: — ^ '

Pursuant to your suggeotion, I- oawNJurfcje Learned 'j,;-.' ■
Hand yesterday afternoon at/fheAvlooe pf.hia court and had .
quite a long talk -with him; /~\Hdv remembered that he had , . '

put over the cases to tl>e Kny term ]andA, when I told him \ ;

that another cane whiohC wa^not/onythe calendar at that
time would possibly be rSa.onqd/in/April, ho said "Of [t

oourse that will also go over to7 the May term". Later on y
he looked up the Clgrk'e calendar and .-found that in no \v

event would the Sdirptinor oaeb. b\reabhe.d before the middle f\\
of the month, rtfdJrsssaid thatin aj>y event, he would not
have time to try/ut t^sNirionth even. if f thp. plalntiff
attempted to jrto' it.,;V:\ . f

TText\nonth Judgi Mhyor will, n.oid the oommori law
calendar and Judfes Hqnd Jeaidf that he would speak to \
JudgO/MSybr about thcSatudt ion and that .1 .-should see ‘.Judge
Mayer sometime nexKqsek, whioh of course; I shall' do,.

| ( The^e\is a possibility apparently, by reason ', of
two o'* three additional judges viho will be here in June!
that one of the ana as might be tried then. I rather H •
irathexedNthe i-mp/ession that Judge Hand would not be ino, lined
himoel^vtoAh<ntl/up the trial of these oaBee if plaintiffs
' urged thbmjjfpr he remarked that he.. thought the, defendants
had already reoelved considerable consideration. |v

It was quite humorouB to see the quiok way,::in\
whioh he assured me that they (the judges) would not. permit
their courts to be tied up for a whole year in the.' t.riql ; .

of those oanes, this remark beingvma^e when I- said' there I
were twelve of them and that probably " it' would- take ;,a month
to try each. I told him that he Bhould not blame, "uis*: that
so far as we are oonoexned, we did not oare if they' were nev¬
er tried, and that we oertainly did not bring thb .sujite.

As I have said above, I shall see Judg/S.; Mayer this
coming week and probably shall be able to write ,yi6u d>ore.’:

GENERAL FILM COMPANY

4-40 FOURTH AVENUE

Thomas A. Edison, Ino.,
Orange, H. J.

Gentleman: -

April 14, 191'

( nnom'vr " ;

APR 1Q1S1? |

^ C. II. V.'HSON j

At a hearing before Judge Mayer held Thursday,
April 12th, oounsel for plaintiffs and defendants in the
treble damage suits being present, and at which the defendants
requested a postponement of the trials of these oases until
after October 1st, when the hearing on the appeal in the
Government Trust suit will be had before the Supreme Court;
the Court ordered the trials to begin on the second Monday
in May, the Chicago Film Exchange case to be taken up first.

It Is now of extreme importance that our oounsel
concentrate on preparation for trial. The question of fees
needs immediate attention.

My understanding of the legal representation for
the various defendants is as follows*

Thomas A. Edison, Ino.

By MoCarter & English

Motion Picture Patents Co.)
Blograih Co. }

By Mr. Kingsley

Essanay Manufacturing Co. )
Selig Polyscope Co. )
George ELeine j

By Mr. Henry Melville

Vitagraph Comiany

By Mr. Edmonds

Paths

By Coudert Bros. (Mr. Samuels)

General Film Co.

By Mr. R. 0. Moon

Various defendants

By Hr. H. 0. Moon, Mr. Allen %
and Mr. Geo. F. Soull.

Various parties in Interest have decided' it to be
imperative that a material sum of money to cover the expenses of
oounsel aoting in the interest of all defendants be subscribed.

General Film Co.

I New York.

-2-

thb soun Frnro

11 subscribers at $250.00 each $2,750.00

Paid to April lBt $1,565,60

Bill rsndersd April 1st 570.75

1,936.35 1.956.35

Available balance - 813.65

GEHEBAL FOIIP FOR ATTORNEYS' FEES AMD OTHER PURPOSES

Fuad to pay for counsel, 6 subscriptions at $500 each - $3,000

Subscribers are the following: General Film Company,

Kaletn Company, Vitagraph Company, Sellg Polyscope

Company, Essanay Manufacturing Company and George Kleins.

Mr. Samuels has recommended to Pathe that they subsorlbe

an equal amount* •

While individual and general oounsel having these treble
damage suits in hand, have labored industriously on these oases, it
seems necessary that there be Intensified co-operation among the
defendants. The decision in the first case will establish a precedent
of the utmost importance. While the plaintiffs may have selected it
because of its assumed strength, there are several points involved
which may, in fact, turn the selection of this plaintiff for the
opening trial to the advantage of the defendants.

Several subscribers who have been interviewed in the
matter have suggested an additional appropriation of $2,500 from eaoh-
defendant, that there be a working fund whioh will adequately take
care of legal fees.

Ur. Allen has submitted bills for his services amounting
to about $3,000, viilch have not yet been passed upon.

Judge Moon asks as general counsel a fee of $5,000, whioh
la not in full for services in this cause.

One subscriber suggests the engaging of oounsel of national
reputation with speolal knowledge of the Sherman law, and has submitted
four names known to all of the defendants. It may be too late to engage
suoh oounsel, but inquiries will be made immediately and the results
submitted.

The writer has been asked to take up this matter of eub-
Boriptions. Will you kindly address him at #63 East Adams Street,
Ohioago, from Monday, April 16th, to Tuesday, April 24th. letters
mailed on the Twentieth Century at 2:45 on any day. will be delivered
in Chicago the next morning at about 11 o’olook. 1

General Film Co.

New York.

It la necessary that all defendants he warned
that lethargy at this stage may lead to disastrous consequences.

Manufacturers who have correspondence or other
matter in the files covering transactions with the Chicago
Film Exchange, and if such matter has not yet been tshen up
with Ur. Soull, are ashad to communicate with him immediately.

gk/pg.

Very truly yours.

Mr. Wilson:—

At your request and for the information of Mr .Edison
and yourself, I summarize below a number of matters concerning;
which I have advised you from time to time recently.

Damage Suite

The appeal in the Government Anti-Trust suit against the
Patents Company and the Edison Company was originally set for hear¬
ing by the Supreme Court on April 9th, and on the strength of this
the Courts here had postponed the trial of the triple damage suits
until May. The Department of Justice was not ready to argue the
oase on April 9th, however, and the appeal was set over to October
2nd. The Courts here have refused to hold up the trial of the
damage suits until after the Supreme Court can pass on the
Government oase and has set the first of these suits for trial on
May 14th, 1917. That suit is one brought by the Chicago Film
Exchange, a concern not licensed by the Patents Company, but one
with whioh the Edison Company and a number of the other lioensees
were dealing up to the time the Patents Company was* formed. At
that time all of these companies, including the Edison Company,
stopped dealing with that exchange, and it now olalms that it
was damaged by being deprived of its source of Bupply. Its
claim, whioh of course is highly padded, is for $1,400,000. whioh
it asks to have tripled.

In these suits the Edison Company is represented by
Mr. McCarter and I have been spending considerable time with him
personally, and in faot, all of my time on this oase, because

C.H.V7,

C-- /LMB - V 24/17

all of the defendants are looking to me to prepare the faots
for presentation. At the end of an interview yesterday with
Mr. McCarter, he agreed that he and I would, on May let, 1917,
bury ourselves here in New York at some place where we oould
have the necessary papers to work with, but where no one would
know where we were bo that we oould devote the two weeks, before
the trial to concentrated preparation. You will, of course,
appreciate that this first case ia the test case, and in fact,
because we have no Supreme Court decision, we are in the position
to raise the same defenseB in this suit as we did in the Govern¬
ment case and have them tried out precisely as if there never
had been a Government case. While the judges here in New York
will be respectful toward the decision of Judge Dickinson in
Philadelphia, we are confident that they will not be Influenced
by it .

Last Tuesday there was a conference of all the oounsel
representing the different defendants in the triple damage suits,
and it was expressly agreed that Mr. McCarter should croes-
examine the witnesses and make the opening address to the jury
and it was evidsnt that it was also desired that he should at
least assist in tha summing up. There will be no difficulty,
therefore, in my opinion, in having our plan of Mr.MoCarter
virtually being the counsel in charge of the case, aooepted by
the other counsel, suoh other oounsel, however, aiding in the
work.

I have repeatedly told Mr. McCarter that the Edison
Company wlehes him to defend these suits precisely as if it were
the only defendant, and that he were the only oounsel in the oase

•C.H.W.

GFS/LMB - 4/24/17

so that there oould be no question of dividing his responsibility .

Poraonally I have laid aside all of my other nork and
am concentrating also on this damage suit, for I do not know of
anything of sufficient importance which cannot be deferred until
after the trial of this first case.

— -00O00—

Latham Patent

The recant deoislon of the Supreme Court on the suit
by the Patents Company against the Universal Company on the
Latham patent has the effect of determining finally that we
cannot enforce the restrictions on the patent plates on the pro¬
jecting machines sold under the Patents Company's license.

In order to arrive at this conclusion, the Supreme Court flatly
overruled its own decision in the Diok case whloh te had been
following in our contracts.

The validity of the Latham patent has not been disturbed
in any v/ay nor passed on by the Court, and the patent is therefore
ao good today as ever. It expires in August, 1519.

Some time since we started a suit against a dealer
in Philadelphia based on the sale of a Power machine, this suit
being to test the validity of the patent.

In view of the decision of the Supreme Court and the
short term of the patent, it is my belief that the Patents
Company should now reach some definite understanding with the
machine manufacturers by which they would all pay a royalty. It
seems to me that almost anything we oan get out of the patent
should be aooepted. The Nicholas Power Company at the time it

C.H.V7.

U.-s/LMB - 4/24/17

stopped paying its royalties, asserted that it would continue
to pay, if we' would reviee the lioenoa agreement so sb not to
compel it to do the thing whioh the Supreme Court now eaye we
cannot enforce. But in the meantime hack royalties amounting
possibly to §15,000. or §20,000. have accrued, and it is
doubtful whether they would now come in and pay the back royalties
rather than take a chance and fight.

The Patents Company is getting a small revenue from one
machine

of the/ manufacturers which is just about sufficient to pay the
operating expenses, hut not enough to pay the lawyers’ fees whioh
have accumulated in connection with this litigation over the
Lathera patent, and its chare of the defense of the damage suits.

It is desirable for the present, however, to keep the
Patents Company in some sort of position where its papers can he
readily accessible because its records are and will he in con¬
stant use in tho preparation and defense of the damage suits.

I am of the opinion _that it will be beot to leave the
Patents Company situation as it is until after the outoome of
the damage suit is determined, and then if there is a pause be¬
tween the trial of the first and seoond’ of euoh suits, take up
seriously the matter of the future polioy as to the Patents
Company,

Delos Holden, Esq.,
Thomas A. Edison, Inc.,
Orange, N.J,

My dear Holden:--

You will reoall that some time back you suggested
a scheme by which the Edison Company could be protected in
the event of an adverse judgment in the ooming damage suit.

I think it is highly desirable for you to oommenoe to lay
plans and have the neoessary arrangements made to oarry out
suoh a scheme beoause, while we are hopeful of the suit,
it is not by any means a certainty that we will not have a
heavy judgment against us.

The situation of the case is about like this:

Judge Mayer has said that if the plaintiffs use the Government
decree and obtain a judgment, then he will stay the collection
of the judgment under some sort of conditions at present
undetermined so that, in the event Dickinson's decree is re¬
versed in the. Supreme Court, we will get a new trial as a
matter of right. Then too, because of the number of in¬
volved questions, ' which"1 will oome up, it is highly probable
that we could, by giving a supersedeas bond, Btay the oolleo-
tion of the judgment.

But you will note that either of these would probably
involve the giving of a bond beoause while a levy might be
made on real estate and beoome a lien on the property pending
the appeal, most of the assets of the various defendants is
in personal property, and of course, no such lien is possible.

I think, therefore, that you should also be prepared
to arrange for the giving of a bond. Under the oireumstanoes
of the case, this will probably have to be a joint bond for
the entire judgment beoause obviously the plaintiffs would not
accept a separate bond for any portion from any one of the
defendants. Inasmuch as the Edison Company is probably the
most obviously solvent one of all of the defendants, the
largest portion of the burden of showing assets to support such
a bond will probably- fall on the Edison Company.

I am writing this, not by way of making any suggestions,

Delos Holden, Esq.

5/VH

but merely to advise you of the situation so that you can act
in the interests of the Edison Company as you think best.

Yours very truly.

GFS/LMB

Robert H. McCarter, Es<j., 3

Prudential Building,

Hewark, R. J.

Dear Hr. McCarter:

I understand that an agreement has been reached for tho
settlement of the suit of Chicago Film Exchange vs. Motion Picture
Patents Co. ot al and tho companion suits in which the plaintiffs
are represented by tho same attorney as in tho suit mentioned, as
discussed at our recent conference, and that the amount to be paid
by Thomas A. Edison, Inc. iB <3100,000. I hand you herewith
checks drawn to your order for this amount to be used for this
purpose.

Mr . Edison relies entirely upon you to protect the inter¬
ests of Thomas A* Edison, Inc., Motion Picture Patents Co. and
Edison Manufacturing Co. in this Battlement and to secure from the
plaintiffs such instruments of release or otherwise aB may be
necessary for such protection.

Kindly acknowledge receipt and oblige,

Yours very truly,

General Counsel.

EUCLS.

DH/JU

Juno 11, 1917

George P. Scull, Esq.,

149 Broadway,

Hew York, U. Y.

Bear Hr, Scull:-

Hr. Wilson would like to havo you write up a sort of
resume , telling what was done in the recent settlement of cer¬
tain treble damage suits, including a list of the suits settled
and the amount paid by us and each of the other defendants in
each of the suits. Also, please tell what happened in the
Sampliner suit,

Kr. Wilson wo^ld also like to have a list of any other
such suits that are pending and a statement of your views as
to the likelihood of there being other suits.

Will you kindly send a couple of extra copies so that
we may have one for this department and one to turn over to Hr.
Edison,

Yours very truly.

Hi-JS.

(Personal)

Henry Lanahan, Esq.,

Legal Dept.,

Thomas A. Edison, Ino.,

Orangey N. J.

My dear Mr. Lanahan:

I have yours of the 11th inst., and enolose

three oopies of memorandum whioh I think .covers what Mr.
Wilson has in mind.

[ENCLOSURE]

1 I

! Ra : Settlements of Damage Suita

Kie following damage suits have been settled and
releases (exoept Miles Bros.) obtained from the plaintiff
oo ipo rations , and from the individuals connected with them:
Chioago Film Exchange
George Melies
Eugene Cline
Samuel Sohiller
U. 3. Film Exchange
Standard Film Exchange
Colorado Film Exchange
Theatre Film Service of San Francisco
Imperial Film Exchange (fruesdale, Receiver*
Miles Bros.

Globe Film Service
Royal Film Service

In the case of Milos Bros., the settlement has been
effeoted, but because Miles Bros, wont into bankruptcy some
years ago, it was deemed unsafe to deal directly with them.
Consequently, both sides have agroed to the settlement and
the releases and money will be exchanged when it is determin¬
ed to whom the money shall be paid, the money in the meantim||
being placed in the hands of ex-Juage McCall, as trustee. ''
By separate agreement, about 1/6 of the settlement ii
each case was also placed in the [hands of ox- Judge McCall
to be paid to the plaintiffs at the end of Hovember 1917,
provided they have in the meantime stirred up no more litiga¬
tion, or become interested in no similar litigation.

[ENCLOSURE]

| In the oa8e of Globe Film Service ana the Royal Film

Service, settlement was made directly with the plaintiff for
the lump sum of §2500, for both oases. The attorney has
a lien of 60# of the recovery, and we reserved enough from
the total settlement to pay this lien.

The total settlement amounted to $326,000. Of
this Edison contributed §100,000., Biograph §50,000., and
Vitagraph, Pathe, Kleine, Selig, Essanay, Kalem and General
Film §25,000. eaoh.

The above is the list as given out, but I have
reason to believe that the General Film share was made up by
possibly three or more of the others, and I have also reason
to believe that Selig' s share wbb advanoed by Kleine and
Spoor.

In the only other remaining suit, that of Samplinei ,
after negotiations to settle on any reasonable basis had
fallen through, we went to trial last week on the single issue
as to whether or not Sampliner, who is a lawyer, in buying
the claim had been guilty of champerty, so that he could not
maintain a suit. After trial, lasting one day, the Judge
directed a verdict for the defendants and dismissed the oom-
plaint. There may be an appeal from this , but it cannot be
heard until next fall in any event.

The foregoing acoounts for all of the suits brought
and settled. There is a possibility, but hardly a probabil¬
ity of two or three more suits being brought, as there are
some people who have as good a oauso of action as those with
whom we have settled, but there are various reasons which lecd '^
me to believe that such suits are hardly likely. One ohief
reason is that I believe that Cookran & Wanton combed the

[ENCLOSURE]

country pretty well for possible oases, and if their canvass
did not suooeed in stirring up litigation, it is hardly
likely that anything else will. In any event, any suits
brought from this time on will have the greater part of the
alleged damage barred by the Statute of limitations .

June 13, 1917

George S’. Soull

2ha above case, as you know, was filed many months ago,
the defendants being the same as in all of the other previous
triple damage suits. Service was had on a number of the defen¬
dants long ago, but, for some reason, the plaintiff did not at¬
tempt to serve any of the 3dison defendants.

Mr. Dyer has sent me a copy of the complaint which has
just been served on him and I presume that you will wish me to
look after this case the same as I did the others.

Plaintiff 4s attorney hasv as you will also recall,
been attempting to settle this case and I talked to Kingsley .
again this morning about it, It seems that plaintiff's attor¬
ney is willing to settle for $5000.00 which is really more than
the case is worth so far as its merits are concerned , but probably
■less than it would cost us. to prepare for trial, let alone ac¬
tually try the case. I think it i3 likely that he will be will¬
ing to allow each of the corporations, together with the individ¬
uals, in whom such cbrporation is interested,, to buy peace at
$500,00 each, and personally I think that if will be advisable

'(»

Delos Holden, 3s4.«...8*...^'Jan. 21, 1919.

lor the Sd^Ron Company to do this. 'Dhere are further con¬
versations to be had and possibly t^iis price oan be cut
some .

Will you please advise me what you wish me to do
and also whether or not you agree with me as to the foregoing
proposed terms of settlement.

January 22, 1919

Goorga ]?, Scull, Ksq.,

141 Broadway,

Mow York, M. Y.

20th CEMTURY OPTISCOFK COMPAHY

Doar Soull:

Replying to your favor of tho 21st Instant, wo
should be pleased to have you look after this case on our
behalf.

If you arc ublo to sottle the case as regards \
the Edison Interests, and suoh Individual defendants as were
oonneoted with tho Edison interests, at a total oost of $500
you are hereby authorized to do so.

Very truly yours.

General Counsel,

^n^fo^y,

Mar oh 18, 1919.

Henry lanahan, Esq..,
legal Department,

Orange, M. J.

He - Samollner vs. Patents Company et al.

My dear to. lanahan: -

1 have yours of the 17th instant, and am enclosing
two copies of a memorandum prepared in accordance with your
request.

GPS /A

Yours truly.

neoEivKe e>'^

a*.

Enclosure.

[ENCLOSURE]

Ur. Charles Edison :

i’hlB memorandum io being written you at tho roouont of Hr.
Lanahnn. Somotimo Einoo I told Ur. Lunahnn that all of tfco triple dam¬
age suits, except tho Twentieth Contury Optiacopo, had boon disposed of.
At that timo tho ouit of Snmplinor for triple damages had boon tried
in tho District Court horO in How Yorb, and had rooultod in a verdict
for dofondanto on a opcoial defense which thoy had sot up, to tho of foot
that Samplinor, an attornoy-at-law, could not buy up and prosocato a
npooulativo cult of this character.

This vordict had boon appoalod to tho Court of Appeals horo,
and tho dociolon of t ho lower court affirmed.

At tho timo that I t a Deed to Ur. Lanahnn it had boon as aimed,
apparently without justified on, that tho case would go no further.

Loot wool; papors in an appeal to tho Supremo Court of tho United Staton
wore served by the plaintiff, so that that appeal will have to bo mot
whoa it arises. Thoro is no reanon to believe that tho Sur.romo Court
will advanoo tho hearing so that it probably will not be roaohod for
more than a yoar.

Personally, I have great confidenao in our dofenno, which
has already boon approved by two courts. Tho situation is so out¬
rageous, that a court iB inclined to find in dofondsnts favor if it
possibly can. Tho ovidonoo shows that Samplinor, an attorney at Cleve¬
land who had done come worh for tho liahe Shore Film Exchange, to oh tho
olalm of tint Exchange against tho licensed manufacturers under tho
Sherman Act, in paymont for servicoo valued at not more than $6,000.

[ENCLOSURE]

Mr. Chatties Edison

Ho then brought suit in Ohio against the Genoral Film Company only
for §101,000, and subsequently brought suit in the Southern District
of Hew York for §250,000. The defense also showed that at the time
ho took tho olaim there had been no attempt to ascertain the amount of
alleged damage which had been done to (the Bxohange.

Both courts found that this was a highly speculative iiti-~
gation, and one which the law does not permit an attorney to engage
in*

It is my personal opinion, that this appeal has been filed
in the desperate attempt to get the defendants to pay something so as
to avoid further exponso in connection with the appeal. The decisions
,of both the lower courts have been so strongly in favor of the de¬
fendants, that it appears that Sampling, or rather his attorneys, are
making a desperate attompt in this appeal.

liar. 18, 1919.

y - "Sip-,

'^T4 £3

March 19, 1919

Mr. Charles Edison:-

In my memorandum of Maroh 4th to Mr. Thomas A. Edison,
prepared at your request, I stated that all of the triple damage
suits had been settled up except the Twentieth Century Optisoope
Company case, this being based on information received from Mr.
Scull.

Last week we were advised by Mr. Scull that he had been
served with a notice of appeal to the United States Supreme Court
in the case of Sampliner vs. Motion Picture Patents Company, Thomas
A. Edison, Ino., Prank L. Dyer, et al. I have asked Mr. Scull to
write a brief statement concerning this case, and I am forwarding
the same to you herewith and presume that you will hand it to your
fathe r.

Henry Lanahan

f?«fk3

December 21, 1920

Ur, Thomas A, sai.son.

You will porhapg remember that there Is still pending
one of the Trlplo Damage Suits brought against various defendants
Including Hot Ion Picture Patents Company, Thomas A. Edison, In¬
corporated, and other motion picture manufacturers, for an alleg¬
ed violation of tho Sherman Anti-Trust Aot, ThLs Is the suit
brought by Joseph H. Sompllner, In this oase one of the defenses
was that the acts by whloh Sampllnor obtained his rights as plain¬
tiff constituted champerty, and that the suit could not, therefore,
bo maintained. Tho case was tried upon this single Ibbuo, end
after tho plaintiff had put In his case, the defendants moved for
a dlreoted verdict and the attorney for tho plaintiff also moved
for the dlreotlon of a verdict In his favor, Tho Court thereupon
seems to have- made a finding of fact and dlreoted a verdict for
tho defendants. The case woo appealed to tho Circuit Court of
Appeals who sustained the deolslon of the lower Court and an
appeal was thereupon taken to tho U.S. Supremo Court, A doolslon
has just boon rendered reversing these doolslons, and I hand you
herewith a copy of the oplnLon of the supreme Court, Ab I under¬
stand the. opinion, tho quostlon relates to a teohnloal point of
procedure, and apparently moans that the trial Judge Bhould not
have passed upon a question of faot, but s ho.uld - have :.-p era 1 1 1 e d
it to go to tho jury. The oase has been remanded for farther
proceedings. This means that a new trial Is ordered, and the

part Lea are in preoisely the same poaLtLon aa when they started,
that La, the Dome defenses are open to us as boforo aiid;*th6.:i’te
question of ohamperty oan ho trLed out before a jury.

Your interests Ln this litigation are Ln the hands
of Ur. Robert McCarter, Mr. Scull informs mo that he ana Mr.
McCarter ana Mr. Seabury, who represents other defendants, are
to have a oonferonoo this wook to doolde upon further prooeduro.

Delos Holden

February 15, 1921

Mr. Charles Batson:

iferrLng to the annexed letW/frora Mr. Soull. You

will note that the defendants In the Sampllner suit, which
Include Motion PLoture Patents Company and Thomas A. Edison, Inc. ,
are liable for costs on the appeal to the Supreme Court amounting
to approximately .$775.00. Fortunately, Mr. Soull has already
collected §250.00 each out of some of the other defendants
and nowasts authority Vo contribute one-fifth of the costs on
behalf of the Edison Company up to -§250.00.

This arrangement^ seems to me is fair, and If you will
approve I will give Mr. Sc^ill this authority.

As a matter of fast, the entire amount could be
collected by the plaintiff from any one of the defendants , so
that it is to our advantage ^o have the amount divided up.

oLj~-

Id 52?

Delos, Holden, Esq. ,

Thomas A. Edison, Ino.,

Orange, N. 3.

My dear Holden:

Ee - Sampliner v. Edison at al.

I enoloBe copy of a letter, received this morning from
William Seat-nry. I -know nothing more than v/hat is stated in the
letter. I have been trying to reach Mr. McCarter today, brt find
that he is in Trenton where he will be tomorrow also, and that he has
a case on in Newark on Satvrday. It is possible that he will be in
his office tonight abort five o’clock and I have left word to have
him call me up then. I should have liked to have arranged a con¬
ference with Mr. McCarter and yourself. Unfortunately all of my
evenings of this week are taken up and Monday and Tuesday of next
week I shall probably be in Philadelphia. I really do not believe,
however, that the offer made by the plaintiff is likely to be with¬
drawn.

• I am dropping a letter .to William Seabury stating that-
both Mr. McCarter and myself are tied up and possibly will not be
able to give him an answer until some time next week.

In the meantime, will you think the matter over and
•possibly discuss it with the Edison people to ascertain their attitude.

Delo3 Holden, Esq,

Mar oh. 3, 1921.

Id 6P?

I p»e@rr;

I am sending a oopy of Seabury's letter to Mr.

Yours very truly.

G2S*C

[ENCLOSURE]

Id 62?

WILLIAM MAR3T0H SEABURY
120 Broadway,

Hew York

March 2 ,

1921.

Dear Mr. Soull:-

Judge Seahury had a long conference
today with Mr. Cannon of Cleveland, one of Sampliner’s
counsel , and Hr. GustavuB A. Rogers, at which a possible
settlement of the Sampllner oase was discussed.

As a final offer of settlement Mr.

Cannon and Mr. Rogers offered, subject to withdrawal
without notice,, to accept $30,000 and costs which we
understand not- to exceed $1,000.

I have telegraphed Mr. A. B. Smith,
President of Vitagraph, who is at. present in Los Angeles,
and have told, him that if five defendants are prepared to
• contribute equally to this settlement , I am prepared to
recommend its acceptance. ‘

Will you please advise me immediately
how you feel about it and whether your client wm be
one of five -tV contribute equally to this settlement.

Mr. Cannon is returning to Cleveland
on Friday of this week and Bays he would like an answer
before he goes.

Sincerely yours.

Id 62?

Mr. Thomas A. Edison:

l^Lj

March 9, 1921

I annex hereto a letter aatea March 2, 1921 £rom William
Seabury to Mr. Scull. Mr. Seabury is attorney for the Vitagraph
Company.

I haa a conference this morning with Mr. Robert McCarter
ana Mr. Scull, in order to obtain their .views ana recommendatlop as
to whether or not we shouia agree to the proposea settlement.

The aeoision of the Supreme Court in this suit means that
the aefense of ohamperty, which by stipulation between counsel can
be trie! separately from the main Issues of the suit, is a question
which shouia go to the jury, that is, it shouia be left to the jury
to aecide whether or not Sampllner aoqulrea the claim upon which he
has brought suit with the intention or for the purpose of bringing
suit, or whether he acquired it in a bona fide manner in payment
for services previously rendered to his ollent. If it is deoiaea
to go ahead with the suit, the oase will practically be in Mr. Mo
Carter's hands as the other defendants have intimated that they
would be glad to have him represent all of the defendants. He,
however, stated that Inasmuch as he Ib a Hew Jersey lawyer he
would like to have Hew York counsel associated with him, which
means that Judge Seabury would also be in the oase. The latter
is a heavy oharger and Mr. Scull thinks would charge $2000 for
defending the case, ana that it could hardly be expected that
Mr. McCarter would charge less since her would be the active trial

II) 627

counsel, and the other expenses might he estimated at §1000, making
a total of §5000. This apparently would he the cost of trying out
the oase on the champerty defense alone, to he followed hy another
trial on the merLts If the defendants were unsuccessful. Mr. Scull
feels quite positive that we should win on the champerty defense,
and thinks Mr. McCarter feels that way also. I Btated that I did
not feel like accepting the responsibility of deciding whether or
not we should endeavor to settle hut would present the matter to you
and asked what recommendation Mr. McCarter would make. He replied
that if you were sitting there In his offloe and he were talking to
you In person he would say that If you feel like being a sport and
taking a chance he would advise you to defend the sultl heoause he
did not feel that even If It. should go against you, the judgment
could he much If any more than the amount at which they offer to
settle, that is, §30,000. He also said that If It was a question
of principle with you, not to he held up hy what he considers vir¬
tually a hlack-malllng proposition and you feel that it is a case
of millions for defense hut not one cent for tribute, then he
would also advise you to fight the oase. On the other hand, the
easiest way out of It, that Is, the line of least resistance, if
you. have no feeling In the matter, would be to settle at the
amount named, your share of which, that is, one-fifth, .would he
§6000, plus costs not to exoeed §200.

Mr. Scull stated that when the case was on before and
was either being tried or about to he tried, the plaintiff offer¬
ed to settle for §15,000, and we might endeavor to beat them down

-3-

ID 627

from' $30, 000 to possibly §20,000 now, but even If this were done
It would save the Edison Company only §2000 and we would have to
pay Mr. McCarter for his servloes In carrying on such negotiations
and also prepare for trial If v/e turn down the proposition for
settlement whloh Is now before us because the plaintiff might
refuse to accept any smaller amount.

Will you, therefore, please Indloate what you would like
ito have us do as regards this offer of settlement. I might add
that In oase a judgment should be entered In this suit It Is
probable that It could be divided up among various defendants
under an agreement to contribute. Inasmuch as the suit Is In
the Southern District of Mew York and we have praotloally no
assets In that DLstrlot It Is likely that the plaintiff If It
became necessary to enforce the judgment by execution, would
prooeed against some of the other defendants, but we would pay
our share under that agreement.

Enc.

DH-ES

Delos Holden

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[ATTACHMENT]

Legal Department Records
Motion Pictures - Case Files

United States of America v. Motion Picture Patents Company etal.

This folder contains material pertaining to an antitrust suit brought by the
federal government against the Motion Picture Patents Co. The case was
initiated in 1912 in the U.S. District Court for the Eastern District of
Pennsylvania. It was subsequently appealed to the U.S. Supreme Court. The
selected items include the government's original petition; testimony by Frank
L. Dyer at hearings held in New York City in November 1 91 3; and memoranda
from 1915 briefing Edison on the progress and settlement of the suit.

. AO

iur,U.i

In the District Court of the United States for the
Eastern District of Pennsylvania.

Tnn United States op America, petitioner.

ORIGINAL PETITION

ceoRce w, wickersham,

Attorney Oct

JAMES A. TOWLER,

REPRINE

In the District Court of the United States for the
Eastern Distriet of Pennsylvania.

The United States op America, petitioner,'

Motion Picture Patents Company and
others, defendants.

No. — .

Original Petition.

To the honorable judges of the District Court of the United
States for the Eastern Distriet of Pennsylvania, sitting in
equity:

The United States of America, by John C. Swartley, its
attorney for the eastern district of Pennsylvania, acting under
the direction of the Attorney General, brings this proceeding
in equity against Motion Picture Patents Company, General

Film Company, Biograph Company, Thomas A. Edison -

(Inc.), Essanay Film Manufacturing Company, the Kalem
Company (Inc.), George Kleine, Lubin Manufacturing Com¬
pany, Melies Manufacturing Company, Pathd Frfires, the Selig
Polyscope Company, the Yitagraph Company of America, I
Armat Moving Picture Company, Frank L, Dyer,. Henry N.
Marvin, J. J. Kennedy, William Pelzer, Samuel Long,. J. A. I
Berst, Sicgmund Lubin, Gaston . Melies, Albert E. Smith,
George K. Spoor, and W. N. Selig.

The defendants above-named, engaged in interstate and
foreign commerce in motion pictures, films, cameras, exhibit¬
ing machines and other articles and apparatus used in the
motion picture art, are violating the provisions of the act of

'H*\ ^ ^ n ^ '

ORIGINAL PETITION.

Congress passed July 2, 1800, entitled “An net to protect
trade and commerce against unlawful restraints and monop-
f olies,” and tliis proceeding is instituted to prevent and
/ restrain the hereinafter particularly described agreements,
• ■ contracts, combinations, and conspiracies in restraint of, and
V restraints upon, interstate and foreign trade in such articles,
the attempts to monopolize and the contracts, combinations,
and conspiracies to monopolize, and the existing monopo¬
lizations of part of trade and commerce among the several
States in such commodities.

On information and belief, your petitioner nllcgcs and
shows:

Motion Picture Patents Company is a corporation organ¬
ized under the laws of New Jersey, with its principal offices
at 80 Fifth Avenue, New York City.

General Film Company is a corporation organized under
the laws of the State of Maine, with its principal offices at 200
Fifth Avenue, New York City.

Thomas A. Edison (Inc.) is a New Jersey corporation,
the successor to all the rights and privileges of the Edison
Manufacturing Company, also a New Jersey corporation.
The principal offices of Thomas A. Edison (Inc.) are located
at Orange, N.. J.

Biograph Company is a corporation organized under
the laws of New Jersey, with its principal offices in New
York City.

Essanay Film Manufacturing Company is a corporation
organized under the laws of the State of Illinois, with its
principal offices at Chicago, Ill.

Kalem Company (Inc.) is a corporation organized under
the laws of the State of New York, with its principal offices
at New York.

Lubin Manufacturing Company is a corporation organized
under the laws of the State of Pennsylvania, with its prin¬
cipal offices at Philadelphia.

Mclics Manufacturing Company is a corporation organ¬
ized under the laws of the State of New York, with its
principal offices at New York City.

Pathd Friires is a corporation organized under the laws
of the State of New Jersey, with its principal offices at New
York City.

Selig Polyscope Compnny is a corporation organized
under the laws of the State of Illinois, with its principal
offices at Chicago.

Vitagrapli Company of America is a corporation organ¬
ized under the laws of the State of New York, with its
principal offices at Brooklyn, New York.

Armat Moving Picture Compnny is a corporation organ¬
ized under the laws of West Virginia, with offices in the
city of Washington, D. C.

Said defendants will bo hereinafter referred to as “corpo¬
ration defendants” and “defendants.”

The individuals made defendants herein and hereinafter
called “individual defendants” and “defendants” have
been and now are officers and directors of the corporation
defendants as hereinafter Btated, and asj supli officers and
directors have participated and do now participate in the
management and direction of the business of the corporation
defendants, and have been and are now responsible therefor.

Frank L. Dyer lias been since its organization president
and a director of Motion Picture Patents Company and a
director of General Film Company since the incoiporation
of the latter company. He is president of Thomas A.
Edison (Inc.) and was president or vice president of its prede¬
cessor, Edison Manufacturing Company, during the period
hereinafter mentioned.

4 OBIGINAL PETITION.

Henry N. Marvin lias been since its organization and is
now vice president and a director of Motion Picture Patents
Company. He is vice president of the Biograpli Company,
and held that office during the period hereinafter mentioned.

J. J. Kennedy has been since its organization and is now
treasurer and a director of Motion Picture Patents Company,
and president and a director of the General Film Company
since the incorporation of the latter company. He is also
president of the Biograph Company and held that office
during the period hereinafter mentioned.

7 William Pelzer has been for several years, and is now,
j secretary and a director of the Motion Picture Patents Com¬
pany, and secretary of the General Film Company since the
incorporation of the latter company. He is also an officer
of Thomas A. Edison (Inc.) and held that office during the
period hereinafter mentioned.

Samuel Long is now and has been since its incorporation
' treasurer and a director of tbe General Film Company. He
. is president and a director of Kalem Company and held that
office during the period hereinafter mentioned.

J. A. Berst is now, and has been since its incorporation, a
director of the General Film Company. He is one of the
officers of and interested in Pathfi Frhres and held that
office during the period hereinafter mentioned.

Siegmund Lubinis now, and has been since its incorpora¬
tion, a director of the General Film Company, and he is
president and a director of the Lubin Manufacturing Com¬
pany and held that office during. the period hereinafter
mentioned.'

Albert E. Smith is now, and has been since its incorpora¬
tion, a director of the General Film Company. He is
president and a director of Vitagraph Company of America
and held that office during the period hereinafter mentioned.

George K. Spoor is now, and has been since its incorpora¬
tion, a director of the General Film Company. He is
president and a director of Essanay Film Manufacturing
Company and held that office during tbe period hereinafter
mentioned.

W. N. Selig is now, and lias been since its incorporation,
a director of the General Film Company, and he is president,
a director, and stockholder of the Selig Polyscope Company,
and held that office during the period hereinafter mentioned.

George Itleine is an individual residing in Chicago, III.,
doing business in his own name. He has been vice presi¬
dent and a director of General Film Company since its
incorporation.

Gaston Melies is now, and has been since its incorporation,
a director of the General Film Company, and he is also
president of Melies Manufacturing Company, having held
that office since its incorporation.

The object of this suit is to remove tbe restraints which
defendants herein have imposed upon trade and commerce in
machines; appliances^ and apparatus relating to the motion-
picture art and upon persons engaged in such trade and
commerce.

A moving picture or a picture of an object in motion
in reality consists of a long series of consecutive snap shots;
or instantaneous pictures, taken one after the other of the
object the movement of which it is desired to portray.
These pictures are recorded nt such brief intervals, 16 per
second, that in any two consecutive pictures there is no
perceptible change in the position of the object which is in
motion.. The result is that when, the series of pictures is
thrown rapidly upon a screen by means of a projecting
machine the illusion of movement is produced. The eye in

o ORIGINAL PETITION.

reality looks upon a swift succession of instantaneous plioto-
graplis but is deceived into belicviiig that it is seeing actual
movement.

Persons engaged in trade and commerce in these appliances
may be divided into three classes: (1) Manufacturers of mov¬
ing picture cameras, films, and projecting or exhibiting ma¬
chines; (2) rental exchanges doing a wholesale or jobbing
business in distributing these machines and films to the
exhibitors; (3) exhibitors of pictures or theatre owners.

With the development of the motion-picture business, in
the last 20 years, numerous patents relating to the motion-
picture art have been issued by the United States. Some of
these patents have related to the mechanism of moving pic¬
ture cameras or have been patents for improvements in said
mechanism; many patents have been issued relating to pro¬
jecting or exhibiting machines and many more for improve¬
ments in said machines. Some of these patents have been
sustained by the courts while some have been held invalid
either by reason of their infringing other pntents or because
they related to matters not properly patentable.

Many important factors, besides the character of the
camera and projector, enter into the production of a good
motion picture. The quality and composition of the sensi¬
tized, translucent strip of celluloid film used in the camera,
known as the negative film; the perforating of the negative
film with mathematical precision before it is placed in the
camera and exposed; the developing of the negative, the
developing and printing of the positive film from the negative
are all important elements to the perfection of which years
of constant experimenting and unremitting research have
been devoted.

Of all commerce relating to the motion-picture art the
commerce in positive motion-picture films is by far the most
considerable. Between two and one-half and three million feet
of pictures are printed every week by the manufacturers and

ORIGINAL PETITION, 7

distributed to thousands of exhibitors all over the United
States. The patrons of these theatres generally demand a
daily change of the entire picture program, and therefore it
is essential to every exhibitor that the source of supply of
pictures bo at all times open and unrestrained.

Within the last ten years the moving-picture business has
reached enormous proportions. It is probably true that a
sum greatly in excess of §100,000,000 has been invested in
the different branches of the business.

In the year 1908 and prior thereto there were ten manu¬
facturers or importers of moving pictures in the United
States; that is to say, there were that number of companies
which were producing or importing reels of motion pictures
and selling and shipping them to exchanges scattered
throughout the United States, the latter in turn distributing
to exhibitors all over the country. There were at that time
some 125 to 150 rental exchanges, and 6,000 or more ex¬
hibitors in the United States.

In this commerce in positive films or moving pictures, the
manufacturers at that time competed with each other for
the business of the exchanges, and all the exchanges com¬
peted for the business of the exhibitor. There were also a
number of manufacturers of cameras and of projecting
machines competing with each other.

The ten manufacturers of films and their respective
places of business from which they sold and shipped as afore¬
said were the following:

American Mutoscope and Biograph Company, New York
City, a New Jersey corporation, now known ns the Biograpli
Company.

Edison Manufacturing Company, Orange, N. J., a New
Jersey corporation, predecessor of Thomas A. Edison (Inc.).

Essanay Film Manufacturing Company, Chicago, an Illinois
corporation.

66498-12 - 2

ORIGINAL

Kalem Company, New York City, a New York corpora-

Georgo ICIeino, Chicago, a large importer of films, repre¬
senting nine foreign companies.

Lubin Manufacturing Company, Philadelphia, Pa., a
Pennsylvania corporation.

George Melies Manufacturing Company, Chicago, Ill., an
Illinois corporation, an important importer of foreign films,
and also a producer of American films.

Pathfi Frftres, New York City (factory, Bound Brook,
N. J.), a New Jersey corporation, an importer of films and
an important producer of domestic films.

Selig Polyscope Company, Chicago, an Illinois corpora¬
tion.

Yitagraph Company of America, Brooklyn,- N. Y., a New
York corporation.

All these producers of positive moving-picture films were
engaged in shipping and distributing their films throughout
the United States to the rental exchanges of which, as stated
above, there were between 125 and 150 in the country. These
rental exchanges, in turn, distributed the films to the thou¬
sands of exhibitors, and in so doing were engaged in interstate
commerce, as practically every rental exchange had many
customers located in other States than the State in which the
rental exchange was situated.

At the time mentioned, and prior thereto, keen competi¬
tion existed in the motion-picture business and commerce
relating thereto. A theater owner or exhibitor was able to
buy a projecting machine from the Biograph Company, the
Armat Company or other manufacturers, and exhibit, thereon
the moving pictures of any manufacturer. He could buy for¬
eign films imported by said Kleine or George Melies Com¬
pany, or American films from any one, or from all of the
manufacturers of films above named. Interstate and foreign

commerce in films, moving picture cameras, projectors and
other appliances relating to the art was unrestrained by any
combination of manufacturers. At that time films were
not leased but sold by the manufacturers to the rental
exchanges. The latter in turn leased but did not sell them
to the exhibitors.

In the year 1908 the defendants determined to destroy
rnmnetirion between them, to monopolize commerce relating
to the motion-picture 'aninigere-

after to carry on said commerce according to the terms of
the unlawful combination which they were to create. Briefly
stated, the combination was to take the following form :
Defendants were to organize a company which should do no I
business and hold no property other than certain letters S
patent which were to be transferred to it by the defendants
and others. This company was to acquire all patents owned j
by defendants and all other patents relating to the motion-
picture art.

Each of the 10 manufacturers was to take from this new
Patents Company a license to produce and lease motion- pic¬
tures. These license agreements were to be all alike and their
terms were to be arrived at by agreement of all defendants
before the patents were assigned by them to the new com¬
pany. In the license agreements were to be incorporated
conditions and restrictions not authorized by the patent
laws and regulating the conduct of the business of the
manufacturers in every detail. Under these agreements
they were all to do business in exactly the same manner.
They were to lease films and no longer sell them ; they were
to lease at uniform and noncompetitive prices and only to
such rental exchanges ns should obtain a license from the

ORIGINAL PETITION.

new Patents Company and should agree to handle only de¬
fendants’ films and to sublease only to exhibitors licensed
by the Patents Company. No exhibitor was to be furnished
films who did not agree not to display films of any manu¬
facturer other than defendants and not to use projecting
machines not licensed by the Patents Company. Defend¬
ants intended by virtue of these agreements to acquire the
power to determine who should engage in business as a
producer of films and who should be excluded from that
business, who should continue to operate a rental exchange
and whose rental-exchange business should be destroyed,
who should remain an exhibitor and who should close his
theater, who should in the future open a new motion-pic¬
ture theater and who should be barred from so doing.
The intent of defendants in forming the new company_an£L
in_entcring into the license agreements was to control, re¬
strain, and monopolize all branches of commerce among the
States of the United States and with foreign nations relating
to the motion-picture art, and to exclude others therefrom.

Accordingly, with the unlawful purposes just mentioned,
the defendants, acting together, incorporated nnder the laws
of New Jersey, September 8, 1908, Motion Picture Patents
Company (hereinafter called the “Patents Company”), with
.a capital stock of $100,000.

The articles of incorporation declare the purposes of Motion
Picture Patents Company as follows :

The objects for which this corporation is formed
are to acquire by purchase, lease, payment of royal¬
ties or otherwise, letters patent, inventions and im¬
provements in materials, processes and apparatus
relating to the production of negatives and positives
for motion pictures, and also relating to the photo¬
graphing, developing, reproducing, projecting, and
exhibiting of scenes and objects nt rest and in motion;

to mortgage, sell, lease, dispose of by agreement or
otherwise, such letters patent, licenses under letters
patent, and improvements, and to license others to
use the inventions covered by the snid letters patent
and to use such improvements; to purchase, hold, sell
and convey such real and personal property as shall be
lawful and adapted to the requirements of the business
of the company.

The certificate of incorporation of the Motion Picture Pat¬
ents Company, hereinafter called the Patents Company, is
attached hereto as a part of this petition marked Exhibit 1.

On December 18, 1908, at a meeting in New York City
attended by all the individual defendants, and all the corpora¬
tion defendants being represented except the Melies Manufac¬
turing Co., defendants, with the unlawful purposes above men- j
tioned, executed (a) preliminary agreements for the assignment
of the patents to the Patents Company, and (6) nine license |
agreements with the Patents Company, one being concluded
by each of the manufacturers (except Melies Co., which signed
a similar agreement on a later day) with the Patents Com¬
pany. The terms of all these agreements had been arranged
beforehand at numerous conferences between the manu¬
facturers.

On the same day, according to their previous agreement,
defendants elected the following officers and directors of the
Patents Company :

President, Frank L. Dyer, also vice president of Edison')
Manufacturing Company. '

Vice president, H. N. Marvin, also vice president of Bio¬
graph Company.

Treasurer, J. J. Kennedy, also president of Biograph
Company.

Secretary, George T. Scull, an nttorney of the Edison
Manufacturing Company. .

Those officers have at all times since its incorporation
constituted the entire hoard of directors of the Patents
Company, except that William Pelzer, an officer of Thomas
A. Edison (Inc.), has been for some time past and is now
secretary and director in place of George F. Scull.

All of the stock of the Patents Company, except the four
qualifying shares held by the four directors, has been owned
ever since its organization, one-lialf by the Edison Manu¬
facturing Company and its successor, Thomas A. Edison
(Inc.), and the other half by the Biograph Company, as
provided in the preliminary agreements for the assignment
of the patents to be next described.

IV.

Preliminary Agreements for tlie Assignment
of the Patents.

There were four of these agreements, all executed as above
stnted, December 18, 1908, each agreement being entered
into by one of the following companies with the Patents
Company:

' 1. Edison Manufacturing Company,

2. Biograph Company,

3. Armat Moving Picture Machine Company, and

4. Vitagraph Company of America.

These agreements are identical as to all the essential
features. A copy of the Edison agreement, dated December
18, 1908, is attached hereto as a part of this petition and
marked Exhibit 2.

After reciting that the Edison Company owns Reissues
letters Patent Nos. 12037 and 12192 and that the Edison
Company desires to acquire $50,000 of the $100,000 author¬
ized capital stock of the Patents Company, in consideration
of the assignment of the patents last named, and after
further reciting that the Patents Company has acquired or

will acquire certain patents (naming them) from the Vita- \
graph Company of America, Biograph Company, and the \
Armat Company, and that the Patents Company contem- \
plates deriving royalties of three kinds (1) from manufac- \
hirers of projecting machines licensed under the patents by
the Patents Company (machine royalties), (2) from exhib¬
itors, for the use of projecting machines licensed under the
patents by the Patents Company (exhibitors’ royalties), and
(3) from manufacturers and importers of motion-picture
films licensed under Reissues 12037 and 12192 above named
(film royalties), the Edison preliminary agreement provides:

(1) The Edison Company agrees to assign reissue patents I

12037' and 12192 and the right to sue for past infringement,
and the Patents Company agrees to issue 500 shares of
stock aggregating $50,000. (Paragraphs 9 and 10.) J

(2) TlieJMisgnjCompany agrees not to ..pledge,, sell, qr_ I

dispose of its capital stocirir'jhe_Pat.ents_CQmpany, and to j
deposit its certificates with a trust company, to he named j

by the Patents Company, as trustee, and to instruct the j

said trustee not to release, transfer, or return the said cer-
tificates so deposited without the consent of the Biograpli j
and Armat Companies. (Paragraph 14.) 1

(3) After deducting: from, the machine royalties a royalty j

of $1 a machine; to be paid the Vitagraph Company, and ) j
after deducting from the gross exhibitors’ royalties 24 per L j
cent for_nnvment to the licensed manufacturers and importers ( !
of motion pictures other thnn the Biograph and Edison Com- J
panics, and after deducting the expenses, the balance is to J
Iw divided ns follows : ■' /

(а) To the Edison Company shall he assigned and1 paid an
amount efinnl to1 the net film royalties.

(б) The remainder up- to an amount equal to the net .film
royalties, shall be assigned- and paid1 to the: Biograpli Com-/ j
pony and the Armat Company, respectively, in. the proportion/

■ “i, ^

X* w« i- ^ V^T -

I , .P „ . L. lL0 WwA l/l.

14 oiiigiNal petition.

of two-tliii'ds to die Biograph Company and one-third to the
Armat Company.

(c) If any balance remains after the foregoing payments,
it shall be divided and paid to the Edison Company, the
Biograph' Company, and the Armat Company in the propor¬
tion of one-half to the Edison Company, one-third to the
Biograph Company, and one-sixth to the Armat Company.
(Paragraph 12.)

(4) Provision is made for the continuation of the agreement
beyond August, 1914, the date of the expiration of the patents
which the Edison Company assigns, for it is provided that
on August 13, 1915, one year after the expiration of the
patents, and at the end of each year thereafter, the Patents
Company shall pay to the trustee who holds its certificates of
stock all of its net profits for the preceding year, consisting
of net machine royalties, net exhibitors’ royalties, and “the
net sum of any royalties which the Patents Company may
collect in lieu of the present film royalties” as a dividend
upon the capital stock of the Patents Company, and will in¬
struct the trustee to divide the said dividends and to pay to
the Edison Company therefrom an amount equal to one-half
of such dividend. (Paragraph 13.)

(5) The agreement may be terminated —

(o) For wilful and continued breach of its terms by either
of the parties.

(6) If the Patents Company becomes bankrupt or ceases
doing business.

(o) If the Patents Company is dissolved voluntarily or
otherwise.

(d) If its charter is repealed.

Upon termination of the agreement for any of the fore¬
going causes, all the right in Patents 12037 and 12192 shall
ybe reassigned to the Edison Company by the Patents Com-
sVpany. (Paragraph 15.)

OHIO INAL PETITION. 15

The preliminary agreement of the Biograpli Company
with the Patents Company is identical with that executed
by the Edison Company, except that it provides for the
assignment of different patents, and also provides that the
Biograph Company shall retain the right (without the pay¬
ment of any royalty to the Patents Company), to practice
the inventions described in the patents which it assigns.
This agreement, like the Edison agreement, stipulates that
upon its termination the Patents Company shall reassign the
patents to the Biograpli Company.

The Armat agreement is similar except that the Armat
Company receives no stock in the Patents Company as a con¬
sideration for the transfer of its patents. Like the others
it contains a provision for a continuance of the arrange¬
ment beyond 1914, and for a reassignment of the patents
by the Patents Company to the Armat Company if the
agreement is terminated for any of the reasons above stated.

In the Vitagraph agreement the Vitagraph Company
agrees to assign six patents and the right to sue for past
infringement, but it reserves the right to practice the
inventions described in said patents without the payment
of any royalty to the Patents Company. The Patents
Company agrees that it will not grant any license to manu¬
facture exhibiting or projecting machines under any
patents owned by it and covering such machines unless
such licensee shall also accept a license to manufacture and
sell exhibiting and projecting machines under the Vita-
graph patents whether or not such licensee may thereafter
make use of any of the inventions covered by said Vita-
graph patents. The Patents Company agrees to pay a
royalty of ?! on each machine containing the inventions
described in one or more of the Vitagraph patents, a royalty
of ?1 when the machine is cnpable of exhibiting by trans¬
mitted light, and a royalty on other kinds of machines.

65498—12 - 8

ORIGINAL PETITION.

ORIGINA

It is provided that tlxe agreement shall continue until
the expiration of all the Yitagraph patents. Upon the
termination of the agreement for any of the causes named,
the Patents Company shall reassign the patents to the
Yitagraph Company.

The Manufacturers’ license Agreements En¬
tered Into With the Motion Picture Pat¬
ents Company.

tially identical with the eight other license agreements exe¬
cuted the same day, provides, in brief :

1. The licensee — that is, the manufacturer of the motion-
picture film — is licensed to lease the film only on condition
that it be used in exhibiting or projecting machines licensed
by the licensor.

2. The licensee agrees that he will use exclusively sen¬
sitized film manufactured by a manufacturer authorized by
the licensor, and that he will buy all his film from that manu¬
facturer. (Sec. 4.) This refers to the Eastman Kodak
Company.

3. The licensor agrees that he will obligate such manu-

On the same day, December 18, 1908, with the unlawful
purposes above mentioned, each of the ten manufacturers
named on pages 7-8, supra (except the Melics Company,
whose president joined later and formed another company),
hereinafter called Patents Company, licensees, concluded
with the Motion Picture Patents Company a license
agreement, each license being practically identical with
every other license. The terms of these license agree¬
ments had been determined at numerous earlier confer¬
ences between defendants. Each agreement regulated in
every detail the manner in which the manufacturer should
do business, which was to he the same for all the manu-
\ facturers. Each agreement licensed^ the manufacturer
to manufacture and use' movingpifliuie cameras embody¬
ing the invention^ "Of the "patents and to “manufacture,
print, '"and proaucrpositl’re~motion pictures embodying the
inventions of said reissued Letters Patent No. 12192 and to
lease the same in the United States * * These

agreements were licenses under the camera and film patents
and are to be distinguished from the licenses to the manu¬
facturers of exhibiting machines to be later described.

A copy of the license agreement dated December 18, 1908,
between the Motion Picture Patents Company and the
American Mutoscope & Biograpli Company, now named
the Biograph Company, is attached hereto as a part of this
petition, marked “Exhibit 3.” This agreement, substan-

facturer not to sell sensitized film to anyone but the licensees,
except a small per cent, which may be supplied by the
manufacturer to persons who do not make motion pictures
of the standard size. (Sec. 4.)

4. The licensee agrees to pay certain royalties on the film
to the licensor. (Sec. 4.) This amounts to approximately
half a cent per foot, subject to reductions in proportion to
sales. These royalties are called the “film royalties.”

5. The Patents Company agrees to collect royalties of ?2
a week from all exhibitors using motion-picture projecting
machines embodying the inventions described in the letters
patent which were to be assigned to. the Patents Company.
(Sec. 4.) This provision is to apply regardless of the fact that
those machines had already been sold with no condition
attached and bad become the property of the exhibitor. The
royalty was to be paid on all machines already on the market.
These are called the “exhibitors’ royalties.”

6. The licensee agrees not to sell any motion-picture film,
but only to lease or rent the same to licensed exchanges and
in accordance with the terms of the exchange license agree¬
ment hereafter described. This was a radical departure from

ORIGINAL PETITION.

the trade custom; previously manufacturers liad sold films
outright and had not leased them.

7. The liceusee agrees not to lease or dispose of motion pic¬
tures to anyone dealing in motion pictures which are not
the output of one of the licensees. (Sec. 6.)

8. The licensee agrees to mark conspicuously on labels
which shall be placed on all boxes containing positive motion
pictures the conditions under which the motion pictures are
leased, among others that (a) the lessee, i. c., the rental
exchange, shall not sell but sliall only have the right to sublet
such motion picture; (6) the lessee shall permit such motion
pictures to be exhibited only on motion picture projecting
machines licensed by the Motion Picture Patents Company
and on no other machines; (c) the lessee shall not sublet such
motion picture at a lower subrental price than that agreed
upon (if any) in the contract of lease between the lessee nnd
lessor; {d) a violation of any of the conditions shall entitle
the lessor, i. e., the manufacturer, to immediate possession of
the motion picture. (Sec. 7.)

9. The agreement fixes a scale of minimum prices for the
lease of positive pictures by the manufacturers to the rental
exchanges, and also provides :

The licensor and licensee further mutually covenant
nnd agree that the above scale of minimum prices is
to remain in force until a new: scale of prices is adopted,
each such new scale to be adopted during the contin¬
uance of this agreement by a majority vote, to be
forthwith communicated to the licensor, of the licensee
nnd the several additional licensees hereinafter pro¬
vided for, or such of them as may at the time be
licensees, on the basis of one vote' for each 1,000
running feet of new subjects. (Sec. 9.)

10. The licensee agrees not to lease motion pictures either
directly or indirectly at lower prices than those fixed and
provided for in the agreement. (Sec. 13.)

11. It is agreed that the subleasing prices for the sub¬
leasing of pictures shall be fixed by a majority vote of the
licensees. (Sec. 17.)

12. The licensee agrees not to dispose of positive
motion pictures except by lease, as above described, or by
sale for export only, and also to refrain from supplying
motion pictures for use with any exhibiting or projecting
machine, the license for which has been terminated by the
licensor, nnd also to refrain from supplying motion pictures
to any lessee who may sublet such motion pictures to persons
using the same for giving exhibitions thereof on exhibiting
machines not licensed by the licensor or the license for which
has been terminated. (Sec. 18.)

13. The parties agree that no person other than the nine
hereinbefore referred to shall obtain a license except by a
majority vote of the licensees, on the basis of one vote for
each thousand running feet of new subjects. (Sec. 20.)

14. The licensor agrees that it will issue licenses to make
and sell exhibiting or projecting machines containing the
inventions described in the letters patent assigned, but that
it will not license any person except upon the condition that
the sale and purchase of such machine gives only the right
to use it solely for exhibiting motion pictures leased by a
licensee of the licensor. (Sec. 20.)

15. The licensor agrees to charge a royalty of §5.00 on
every such machine. These are called the “machine royal¬
ties.”

16. The licensor agrees to license the licensee to make
and sell exhibiting machines. (Sec. 20.)

17. It is provided that the licensee may renew this agree¬
ment by giving notice to the licensor before April 20, of
each year until August, 1919, the date of the expiration of
the Letters Patent 707934, known ns the Latlmm “loop”
patent. (Sec. 21.) This is a patent relating to part of the
mechanism of the camera nnd projector.

ORIGINAL PETITION.

As previously stated, the Patents Company entered into
substantially the same agreement with each of the nine
manufacturers. George Kleine, one of the nine, but an
importer and not a manufacturer, was licensed to import
positive films, but the amount he was allowed to import
was limited to 3,000 running feet of new subjects per week,
and he agreed to confine his purchases to two foreign
manufacturers, Gaumont and Urban. Prior to this license
arrangement Kleine had imported the films of nine or ten
foreign manufacturers and amounts largely in excess of
3,000 feet per week.

A few months later the Patents Company, by agreement
of tbe nine manufacturers, voting as provided in paragraph
13 supra (section 20 of the license agreement) licensed
defendants Gaston and George Melies to import not to ex¬
ceed 1,000 feet of new subjects per week made in Prance
by George Melies. Said two individual defendants are now
doing business in the name of the Melies Manufacturing Co.,
corporation defendant, which company has the benefit of
the license granted Messrs. Melies.

VI.

The Rental Exchange Agreements.

As stated above (supra p. IT, par. 0) the manufacturers’
license agreement requires the manufacturer to lease film
to rental exchanges in accordance with the terms of an
exchange license agreement. In other words, the manufac¬
turers, on December 18, 1908, adopted, and thereafter used,
a uniform contract in the distribution of films to the rental
exchanges. No company would thereafter lease or consign
films to any rental exchange which had not signed one of
these so-called license agreements with the Patents Com¬
pany; furthermore, every rental exchange was not afforded

an opportunity to enter into such an agreement, for the
defendants, acting through the Patents Company, refused
licenses to a large number of the rental exchanges. Most
of these were driven out of business. To about one hun¬
dred of the rental exchanges the Patents Company granted
licenses. Under the terms of these agreements the Patents
Company reserves the right to terminate the license at any
time without cause on fourteen days notice by it, and to
cancel the agreement at once on breach of any of its
terms by the rental exchange. After such termination of
an agreement the exchange can not obtain films from any
of the licensed manufacturers. These agreements de¬
stroyed all competition between the rental exchanges for
they prescribed the manner in which the exchange should do
business, which was made the same for all exchanges. There¬
after the defendants, acting through the Patents Company,
prevented the exchanges from competing with each other
for the business of tbe exhibitors by prohibiting any two
exchanges from serving the same exhibitor.

A copy of the exchange license agreement between' the
Patents Company and the rental exchange is attached hereto
as a part of this petition, marked “Exhibit 4.”

After enumerating the patents owned by the Patents
Company, and reciting that the Patents Company has
licensed nine manufacturers, naming them, tc manufacture
or import motion pictures,, and to lease licensed motion
pictures for use on. projecting machines licensed . by the
licensor, the Motion Picture Patents Company, licenses the
rental exchange under reissued letters Patent 12192; the
film patent, to lease licensed motion pictures! from the
licensed manufacturers' and importers, and to sublet- said
licensed motion pictures for use only on projecting machines
licensed by the licensor under . letters patent owned by it.

OBIGINAL PETITION.

ORIGINAL PETITION.

The licensee, i. e., the rental exchange, agrees as follows:

(1) Not to buy, lease, or otherwise obtain any motion
pictures other than licensed motion pictures, and to dispose
of motion pictures only by subleasing under the conditions
set forth in the contract. (Condition 1.)

(2) The ownership of each licensed motion picture is to
remain in the licensed manufacturer. (Condition 2.)

(3) The licensee shall not sell or exhibit licensed motion
pictures, but shall only sublet the same, and only to exhibi¬
tors who shall exclusively exhibit licensed motion pictures.
(Condition 3.)

(4) The licensee shall not sell, rent, or otherwise dispose of
any licensed motion pictures to any person engaged in selling
or renting motion picture films. (Condition G.)

(5) The licensee shall not sell or dispose of motion pictures
to any person in the exhibition business who may have vio¬
lated any of the conditions imposed by the licensor through
any of its licensees and of which violation the licensee may
have had notice. (Condition 10.)

(6) The licensee shall not sublet licensed motion pictures
to any exhibitor unless a contract with said exhibitor satis¬
factory in form to the licensor, i. e., the Patents Company, is
first executed, and unless each motion picture projecting
machine on which the licensed motion pictures are to be used
by such exhibitor is regularly licensed by the Motion Picture
Patents Company and the license fees therefor have been
paid. (Conditions li and 12.) The license fee is ?2 a week
on every projector owned by the exhibitor.

(7) The licensee or rental exchange is required to mail to
the Patents Company a list, giving the name of each exhibitor
supplied with pictures by the rental exchange. (Condition
12.) The rental exchanges thereafter were not allowed to
supply the same exhibitors; the latter were apportioned
among the licensed exchanges. This paragraph (No. 12) in
effect prevents the rental exchanges from subleasing pictures

to a new exhibitor until that exhibitor has received the
approval of the Patents Company; by it the latter company
is enabled to determine who shall become an exhibitor.

(8) The licensor agrees that before licensing any person
in the United States to lease licensed motion pictures from
licensed manufacturers, i. e., to be a rental exchange, it will
exact from each such licensee an agreement similar in terms
to the present agreement. (Condition 1G.)

(9) The licensor may terminate the agreement on fourteen
days’ written notice to the licensee of its intention so to do,
or immediately upon breach of any of its conditions. (Con¬
dition ID.)

(10) The terms and conditions of the license may be
changed at the option of the licensor upon fourteen days’
written notice to the licensee. (Condition 20.)

(11) The licensee shall return to each licensed manufac¬
turer on the first day of every month, commencing seven
months from the first day of the month on which the agree¬
ment is executed, an amount of positive motion picture film
in running feet equivalent to that obtained the seventh
preceding month. (Condition 9.)

(12) The leasing prices are stated in the agreement.
(Condition 20.) These become the same for every rental ex¬
change in the United States.

The effect of these rental exchange agreements was to
place all the rental exchanges at the mercy of defendants and
the Patents Company. This company would not allow
exhibitors to lease from different exchanges, blit required
each exhibitor to obtain his entire supply of films from one
exchange. In this respect competition between rental ex¬
changes was eliminated. Each rental exchange paid the
same for his films as every other exchange. To-day each
of the ten Patents Company, licensees, leases its films at the
same prices and on the same terms ns the other nine licensees.

65498—12 - 4

ORIGINAL PETITION.

2i ORIGINAL PETITION.

VII.

Licensed Exhibitors.

After January 1, 1909, the defendants commenced to do
business in accordance with the terms of the unlawful com¬
bination which they had formed and in which they are now
engaged, and thereafter not one of the thousands of theater
owners or exhibitors in the United States could obtain for
exhibition purposes a motion picture manufactured by any
of the ten manufacturers, comprising all the manufactur¬
ers and importers at that time doing business in the United
States, unless the Patent Company recognized him and gave
his name as a licensed exhibitor to the licensed exchanges.
In order to secure a license, the exhibitor has to obligate
himself to' use upon his machines only pictures manu¬
factured by the licensed manufacturers. The exhibitor has
to pay oh every exhibiting- machine owned by him ?2 a week
to the Patents Company; this so-called exhibitor’s royalty
applies to machines sold years before to the exhibitor
without any conditions being attached to the sale. No two
exchanges are permitted to serve the same exhibitor during
the same period. Breach by a rental exchange or by an
exhibitor of any of the conditions imposed by the defendants
through the Patents Company subjects such rental exchange
or exhibitor to an immediate cancellation of his license. The
power and monopoly of the defendants became absolute. De¬
fendants, through the Patents Company, were enabled to and
did determine whether new motion picture theatres should or
should not be opened and whether old ones should be closed,
although defendants had no proprietary interest in Buck thea¬
ters. This power defendants have exercised and continue to
exercise arbitrarily and unreasonably through the Patents
• Company. Whenever the Patents Company cancels the
license of a rental exchange it sends notice thereof to all the

customers of such exchange, and likewise when it cancels
the license of an exhibitor notice is sent to the rental
exchanges. Thereafter neither such rental exchange nor
exhibitor can obtain anywhere in the United States the
product of any of the ten manufacturers defendants herein.

All the oppressive restrictions and unlawful conditions
contained in the agreements and pointed out in the preced¬
ing paragraphs of this petition, and to be noted in the para¬
graphs to follow, defendants have observed and enforced at
all times since they engaged in their unlawful combination,
and they will continue to enforce said unreasonable and
oppressive restraints and conditions unless restrained by
this honorable court.

VIII.

license Agreements With Manufacturers -of
Exhibiting Machines.

Defendants on December 18, 1908, not only by- means of
the Patents Company and the so-called license agreements
bound together all manufacturers of moving-picture cameras
and films into one combination, but also with the some un¬
lawful purpose, and as a further means to monopolize trade,
devised license agreements i between , the Patents • Company
and each manufacturer of -projecting or exhibiting machines.
The license agreements of December 18, • 1908, recite that
the parties are intending to conclude other agreements relat¬
ing to projecting machines. ( Supra, p. 19.) The agreements
between the Patents Company and projecting , machine manu¬
facturers contain many of .the restrictive provisions incor¬
porated in the license agreements under the' camera- and film
patents 'referred to above. (Supra, pp.' 1G to 19.) Among
other things, these agreements -provide that every: exhibiting
machine shall be sold subject to the condition that it. shall
be used solely for exhibiting motion pictures containing the

ORIGINAL PETITION'.

ORIGINAL PETITION.

invention of the reissued patent 12192; that is to say, every
machine is to be sold subject to the condition that it shall
he used only with films supplied by one of the ten licensed
manufacturers.

These agreements also fix the prices at which all pro¬
jecting machines are to be sold; these prices are made the
same for all— that is to say, all competition in interstate
commerce between the various manufacturers of projecting
machines as to the prices and terms of sale of their respective
machines is destroyed by establishing uniform prices. The
agreements provide that the manufacturer shall pay the
Patents Company a royalty of ?5 on every machine, called
“machine royalties.”

The Patents Company, acting under the direction and
domination and in the interest of defendants, early in
1909 concluded license agreements of the character indicated
with all the companies at that time manufacturing and sell¬
ing projecting machines in the United States, to wit:

American Mutoscope and Biograph Co., Apr. 20,
1909.

American Moving Picture Machine Company, Fob.
13, 1909.

Armat Moving Picture Co., Jan. 7, 1909.

Edengraff Mfg. Co., Jan. 7, 1909.

Edison Mfg. Co., Jan. 7, 1909.

Enterprise Optical Mfg. Co., Jan. 7, 1909.

Lubin Mfg. Co., Jan. 7, 1909.

Nicholas Power, Jan. 7, 1909.

Eberliard Schneider, Jan. 7, 1909.

Selig Polyscope Co., Jan. 7, 1909.

Spoor & Co., Jan. 7, 1909.

Vitagraph Co. of America, Jan. 7, 1909.

The companies just named, located in different States,
were selling and shipping projecting and exhibiting machines
in interstate commerce throughout the United States.

A copy of the license agreement under the exhibiting-
machine patents between the Motion Picture Patents Com¬
pany and the Armat Moving Picture Company is attached
hereto as a part of this petition marked “Exliibii 5.” This
agreement is similar to those issued to the other companies
named above.

IX.

General Film Company.

As has been pointed out above (supra, p. C), persons
engaged in the motion-picture business belong to one of
three classes: (1) Manufacturers of cameras, films, and other
appliances relating to the motion-picture art, and distribu¬
tors of these articles to the rental exchanges; (2) rental
exchanges or wholesale distributors, constituting the source
of supply of the exhibitor; (3) exhibitors of moving pictures.
By means of the Motion Picture Patents Company and the
agreements above described, defendants restrained the com¬
merce of the manufacturers and dominated and controlled
the business of the rental exchanges and exhibitors. On or
about April, 1910, defendants set out to monopolize the
bnsiness of all the rental exchanges in the United States,
their purpose being to drive out of business all persons so
engaged and to absorb to themselves the profits theretofore
made therein. This unlawful end they accomplished in the
manner to be presently described by means of a corporation
organized by them for that purpose, General Film Company,
corporation defendant.

In April, 1910, defendants, with an intent to monopolize
the rental exchange business, organized the General Fiim
Company, a Maine corporation, ‘ capital stock $2, 000, 000,
reduced March, 1911, to ?1, 000, 000, preferred $800,000, com¬
mon $200,000, common stock alone having voting rights

ORIGINAL PETITION.

and all being owned by defendants. Each of the incorpora¬
tors was connected with and interested in the business of
one of the ten Patents Company, licensees.

The following were at once elected officers and directors,
each officer and director being an officer of and largely
interested in the business of one of the ten manufacturers:

President, J. J. Kennedy, president of the Biograph Com¬
pany, and treasurer and director of the Motion Picture
Patents Company since its organization.

Vice president, George Kleine, owning the business of
George Kleine, hereinabove referred to.

Treasurer, Samuel Long, president of the Kalem Company.

Secretary, William Pelzer, also secretary of the Motion
Picture Patents Company, and an officer of the Edison Manu¬
facturing Company.

The following were elected directors:

Frank L. Dyer, president of the Motion Picture Patents
Company and vice president of the Edison Manufacturing
Company.

J. A. Berst, vice president of Patlifi Frbres.

J. J. Kennedy, president of the Biograph Company and
treasurer of the Patents Company.

Siegmund Lubin, president of -the Lubin Manufacturing
Company.

Samuel Long, president of the Kalem Company.

Gaston Melics, president of Melics Manufacturing Com¬
pany.

Albert E. Smith, president of Vitagraph Company of
America.

George K. Spoor, president of Essanay Film Manufactur¬
ing Company.

W. N. S'elig, president of the Selig Polyscope Company.

George Kleine, one of the ten licensed manufacturers.

Each one of the ten Patents Company, licensees, was repre¬
sented by one director on the board of the General Film
Company, and only representatives of those companies
were elected to that board.

The articles of incorporation of the General Film Com¬
pany recite among its purposes the following :

A copy of the charter of General Film Company is
attached hereto as a part of this petition, marked “Ex¬
hibit 6.”

Before the organization of the General Film Company
defendants, who were to be its officers and directors, had
determined the amount of money the new company should
expend in order to acquire, by purchase, by driving out of
business, by cancellation of licenses by the Patents Com¬
pany, or by other appropriate methods, all the licensed
rental exchanges, to wit, §2,480,000 cash and §988,800 in
preferred stock in the new company. Something less than
that amount defendants in fact expended before January,
1912, in bringing to a successful conclusion the unlawful plan
which they had set out to accomplish.

As has been pointed out previously (supra, 23), defendants,
through the Patents Company, had incorporated in the
license agreements with the rental exchanges a provision
authorizing the Patents Company to terminate the agree¬
ment at any time upon two weeks’ notice, and immediately

OIIIGINAL PETITION.

ORIGINAL PETITION.

upon breach of any of its terms. This provision defendants
after the formation of the General Film Company proceeded
at once to invoke. Between April, 1910, and January 1,
1912, defendants, through the General Film Company,
acquired the business or cancelled the license of every
licensed rental exchange in the United States, except one,
paying therefor $2,243,089 in cash and notes and $794,800
in preferred stock. During this period the General Film
Company purchased 57 exchanges, paying therefor the
sum just stated. Since its organization the Patents Com¬
pany has cancelled the licenses of and driven out of business
42 exchanges, of which 21 were cancelled after the General
Film Company commenced business. The result of the
conspiracy of defendants is that to-day, of all the exchanges
doing business in the United States December 18, 1908,
only one, the Greater New York Film Company, snrvives.
The latter company refused to sell out, whereupon the
defendants, through the Patents Company, cancelled its
license, but under the protection of a decree issued by the
United States District Court in New York against defend¬
ants it is still able to obtain the films of defendants.

The General Film Company was incorporated by defend¬
ants solely as an unlawful instrumentality to effect the
illegal purposes of defendants, and in order that it, in coop¬
eration with the Motion Picture Patents Company, might
drive out of business and interstate and foreign commerce
in the United States all rental exchanges and absorb their
businesses and profits and thereby enable the defendants to
further monopolize commerce relating to the motion-picture
art. The General Film Company became on its incorpora¬
tion and has ever since been a combination in restraint of
trade and commerce between the States and a monopoliza¬
tion thereof.

31
X.

Agreement Between Motion Picture Patents
Company and General Film Company.

Motion Picture Patents Company and General Film Com¬
pany, acting under the direction and domination of the in¬
dividual and other corporation defendants, with the unlaw¬
ful purposes hereinabove described, entered into an agree¬
ment April 21, 1910, unlawfully and unreasonably restrain¬
ing the interstate trade of the General Film Company and of
the 10 manufacturers, to the execution of which agree¬
ment each of the 10 Patents Company licensees assented
in writing on the same day. A copy of that agreement,
dated April 21, 1910, is attached to this petition as a part
hereof, marked Exhibit 7. Defendants have observed and
carried out said agreement since its execution and they are
now conducting their several businesses in accordance with
and in conformity to the unlawful terms and conditions es¬
tablished by said agreement. In brief, the agreement, Ex-'
Mbit 7, provides:

(1) The Patents Company grants to the General Film
Company in the United States a license to have positive
motion pictures manufactured for it by the Patents Com¬
pany licensees, and to purchase positive motion pictures
manufactured in foreign countries, and to lease such positive
motion pictures provided they are leased subject to the con¬
dition that they be used solely in exhibiting or projecting
machines containing the inventions or some of them of the
letters patent owned by the Patents Company. (Par. C.)

(2) The licensee agrees that all positive motion pictures
manufactured for it during the continuance of the agreement
shall bo manufactured only by the Patents Company,
licensees. (Paragraph 8.) This paragraph prevents the
General Film Company from purchasing, leasing, or selling
or otherwise dealing in positive motion pictures except those

65498 — 12 - 5

ORIGINAL PETITION.

manufactured for it by the Patents Company, licensees, with¬
out the consent in writing of the licensor.

(3) The Film Company agrees to pay a royalty to the licen¬
sor on all motion pictures purchased by it at the maximum
rate of one-lialf cent per running foot. (Paragraph 9.) This
royalty is subject to reduction if the amount purchased is over
4,000,000 running feet. If it runs as high as 10,000,000
feet, the royalty is reduced to 3(4 mills per running foot.
(Paragraph 10.)

(4) The Filin Company agrees not to lease, sell, or other¬
wise, dispose of motion pictures to anyone purchasing, using,
dealing in, etc., motion pictures which are not the output of
the General Film Company or of other licensees of the Patents
Company. (Paragraph 12.)

(5) The Film Company agrees that no lease of positive
motion pictures manufactured for or purchased by the
licensee shall be made in the United States except upon
certain conditions which are practically the same as those
which were stated in the rental exchange agreement executed
between the Patents Company and the rental exchanges
(supra, pp. 19 to 22) (paragraph 14), to wit:

1. The lessee (that is, the exhibitor) shall not dis¬
pose of the pictures, but shall only have the right to
use them in machines licensed by the Patents Company
under patents owned or thereafter acquired by the
Patents Company.

2. The lessee shall not sublet the motion pictures.

3. The licensee, that is, the Film Company, shall
on the first day of every month withdraw from the
market an amount of positive motion pictures equal
to the amount of such motion pictures leased by it
during the seventh month preceding the date of each
such withdrawal.

4. The violation of any of these conditions entitles
the lessor (General Film Company) to immediate
possession of such motion pictures.

(C) The Film Company agrees that it will dispose of motion
pictures manufactured for or purchased by it only by sale for
export or by lease to motion-picture exhibitors in the United
States for the purpose only of using such motion pictures
for giving exhibitions in exhibiting machines licensed by the
Patents Company under patents named or thereafter ac¬
quired. (.paragraph, 15) ; that it will not use the pictures for
the purpose of giving exhibitions thereof for profit; that it
will not knowingly allow motion pictures manufactured for
or purchased by it to be used with any exhibiting machines
not licensed by the licensor, under patents owned by it or
thereafter acquired; that it will refrain, from supplying mo¬
tion- pictures for use- with' any exhibiting machines the
license for which has been terminated and- the Film Company
notified, thereof by the licensor; that it will refrain from, sup¬
plying motion pictures, to, any lessor who may loan or sub¬
lease such, motion pictures, or who may use such pictures for
giving- exhibitions thereof in- exhibiting machines not licensed
by the. licensor or- the license for which has, been terminated,
(paragraph 15).

(7) It is provided that the agreement may be renewed
yearly, until1 August 26j 1919,. the date of expiration of Patent
707934;. known as- the Latham- “Loop” Patent. (Para¬
graph 18.)

The agreement last described, was consented, to 'by eaoh of
the- 10 Patents Company licensees, each, of whom .affixed its
consent thereto- in- writing,- such consent being given “withi
the. understanding that said’General. Film. Company is not to,
have, under, said-limited license’in writing any. voting rights’ or '
royalty-sharing rights such as those referred, to, in, said agree¬
ment’ of 'the undersigned, with- said Motion- Picture ■ Patents
Company.”

ORIGINAL PETITION.

Agreements Between the General Film Com¬
pany and Patents Company Licensees.

On April 21, 1910, with the same unlawful purposes each
of the 10 Patents Company licensees executed an agree¬
ment with the General Film Company to supply the latter
with Him to be leased to exhibitors. These agreements are
identical with each other except as to the paragraph stating
the number of running feet of film which the General Film
Company agrees to take.

Defendants by agreement with each other executed these
agreements as another means for accomplishing their unlaw¬
ful purpose to monopolize the motion-picture art and all
interstate and foreign business, trade, and commerce relating
thereto. Defendants have observed and are now observing
said agreements and all the terms thereof, and interstate
and foreign trade and commerce in articles necessary in the
motion-picture art are being restrained thereby.

A copy of the agreement between the General Film Com¬
pany and Edison Manufacturing Company, dated April 21,
1910, is attached hereto os a part hereof, marked “Exhibit 8.”
Said agreement, substantially identical with nine other
agreements concluded the same day with the other Patents
Company licensees, after reciting the interlocking restric¬
tions contained in the other agreements, provides in brief:

(1) The manufacturer (Edison Company) agrees to supply

the General Film Company with as many copies of each
licensed motion picture released by the manufacturer as the
General Film Company may require for the conduct of its
business and to supply them at the same leasing prices, terms,
etc., as it leases them to others. (Paragraph C.) ’

(2) The General Film Company agrees that it will lease
from the manufacturer motion pictures and will use its best
efforts to introduce them and extend their "use by motion

ORIGINAL PETITION. 35

picture exhibitors using the licensed projecting machines.
(Paragraph 7.)

(3) The Film Company agrees to pay the manufacturer a
share of its net profits at the end of each year during the
continuance of the agreement, after it has paid 7 per cent
dividend on its preferred stock and 12 per cent dividend on
the common stock. The manufacturer is to have such a
proportion of the net profits remaining after the deduction
of the dividends as the number of running feet of pictures
leased by the manufacturer to the Film Company bears to
the total amount of running feet leased by the Film Company
from all the Patents Company licensees during that year.
(Paragraph 8.)

(4) The agreement shall continue until August 26, 1919,
the date of the expiration of the Latham “loop” patent, No.
707,934. (Paragraph 12.)

The agreement states the minimum number of reels which
the General Film Company agrees to take, as well as the
maximum which it may be obliged to receive.

XII.

Conclusion.

Throughout the period of time mentioned in this petition
and in all their actions described herein, defendants havto
been actuated by the purpose to monopolize aU branches of
interstate and 'foreign commerce relating to the motion-
picture art and to exclude all others therefrom.

As a means to that end, they organized the Motion Picture
Patents Company, a New Jersey corporation. To it they
transferred patents competing with each other and patents
not competing, patents valuable and patents of little if
any worth.

Not satisfied with the benefit of the lawful monopolies nnd
rights belonging to them under the several letters patent
which they separately nnd independently of each other

01IIGINAI.

owned, defendants coveted the unlawful power which would
come to them if they combined all patents in one ownership;
that is, if they created and thereafter, possessed and main¬
tained a monopoly of all patents relating to the motion-
picture art. Defendants formed a combination of patents
as one of the methods for monopolizing interstate and
foreign commerce pertaining to the motion-picture art.

The. Motion Picture Patents Company is an unlawful in¬
strumentality operated and maintained by defendants solely
for the purpose of carrying into effect their unlawful intent.
The Patents Company has. never owned any property except
the patents transferred to it by defendants and which, upon
its dissolution, it must reassign, without consideration, to the
several defendants who, owned and: transferred, them to the
Patents, Company. (Supra, pp, u' to. 16.), Other than col¬
lecting royalties from defendants and. distributing such roy¬
alties among them in the manner prescribed by, the agree¬
ments, its. only business has been and is the bringing of
lawsuits under the patents, which it acquired, from defend-,
ants. Acting under the direction of the other defendants,
in order to compel observance by rental exchanges, exhibit¬
ors, and all other persons of tiic unlawful restraints embodied
in the agreements, and in order to harass and oppress all
persons engaged in the motion-picture business who have
not obeyed; its mandates, it has. brought hundreds of suits in
the. courts of. law against rental, exchanges, exhibitors, and
others. Defendants , have used their, power, great by, virtue
of . their combination, unreasonably and oppressively in order,
to further extepd, tjieir,. monopoly, and, exclude others, from
the motion-picture art,

Defendants deviled the, interlocking restrictions, described;
above, applying tq, the. use of their several , machines, applb
ances, and; apparatus as. a method, to pei-petunte. their., mo¬
nopoly. Not one of these restrictions is a legal and; reason¬

able condition attached to the use of a patented machine
by the owner of the patent acting singly and in good faith
in order to protect his lawful monopoly, but each condition
is one and a part of a combination of conditions and restric¬
tions devised by a combination of all the defendants, all the
conditions applying collectively to and interlocking the use
of all the machines. These restrictions and unlawful
restraints dovetail into each other in such a manner that
the manufacturer, the rental exchange, and the exhibitor
must use all or none of the machines covered by the different
patents. He can use no others.

With the object of concealing their true purposes and the
the real character of the combination, defendants devised,
adopted, and enforced the so-called license agreements,
attempting to give to their actions a lawful appearance and
to the combination a legal form. In the agreements they
embodied unlawful restraints upon commerce, styled by
defendants qualifications upon the use of patented machines,
but in fact unreasonable, undue, and oppressive restraints
arbitrarily imposed by them upon commerce in articles not
patented.

As previously pointed out, by far the largest and most
important part of the commerce relating to the motion-
picture art is the commerce in positive films, of which mil¬
lions of running feet are distributed each week throughout
the United States and subsequently displayed by thousands
of exhibitors throughout the country. The combination ^of
defendants was devised to restrain that commerce. Such
positive films" are not 'patented. Reissued Letters Patent
13192 (attached hereto as a part hereof, marked “Exhibit
9”), made by defendants- the basic patent of their combina¬
tion, relates only to the negative film. The positive film,
(which is sometimes copyrighted by the producer), is the
product of the negative, being developed and printed from

OHIGINAL PETITION.

the latter. The dominion of the patentee does not include
control over the product of the patented article unless new
in a patentable sense. Therefore, whether or not Reissued
Letters Patent 12192 is a valid patent, as to which grave
doubt must exist in view of the decision of the Circuit Court
of Appeals of the Second Circuit, March 10, 1902, holding
invalid the patent of which 12192 is in part a reissue and
stating that the owner of the prior patent was not the
inventor of the film (114 Fed., 934), in any event, defend¬
ants have no lawful right under the patent laws to destroy
competition in commerce and restrain commerce in the

(unpatented positive film.

Defendants, by means of the license agreements, have pre¬
vented and are preventing the importation of foreign films
except to a limited extent by defendant Kleine and corpora¬
tion defendant, Melies Manufacturing Company, who are
allowed to import only a small quantity weekly, and thereby
defendants have deprived and are depriving the public of
the advantages which would arise from competition with
foreign films.

Defendants created the General Film Company as a means
for monopolizing the commerce of the rental exchanges in the
manner hereinabove pointed out, and they are now maintain¬
ing and operating it with the same unlawful intent.

Between 70 and 80 per cent of the motion-picture film
annually manufactured and sold in the United States is the
product of the ten Patents Company licensees. This film
is shipped by the manufacturers to 45 branches of the Gen¬
eral Film Company scattered over the United States and
distributed by the latter to approximately 7,000 exhibitors.
Independent manufacturers of film may not distribute their
product through the General Film Company, which is the sole
distributing agency of the Patents Company licensees; exhib¬
itors obtaining supplies of film from the General Film Com¬
pany are not allowed to display the films of the independent

OHIGINAL PETITION. 39

manufacturers. Independent exchanges are cut off from
handling the film of the ten Patents Company licensees and
independent exhibitors and theater owners can not obtain
for exhibition in their theaters the pictures of the Patents
Company licensees.

In conclusion, all the unlawful restraints and conditions
contained in the license agreements and described in this
petition defendants to-day are observing and enforcing, and
will continue to observe and enforce unless restrained by
this honorable court.

XIII.

Jurisdiction.

Petitioner avers that the combination and conspiracy to
restrain interstate and foreign commerce and motion-picture
films, machines, and apparatus relating to the motion-picture
art still exists; that the defendants are carrying out and
engaging in the some within the State of Pennsylvania
within the Eastern District of said State, and that many of
the things herein complained of have been committed in
whole and others in part within the said State and district
and are now being committed therein; that the defendant
Lubin Manufacturing Company is located at and doing
business within said State and district

XIV.

Prayer.

Wherefore petitioner prays :

1. That the combination hereinbefore described, in and of
itself, as well ns each and all of the elements composing it,,
whether corporate or individual, whether considered collec-.
tively or separately, be decreed to be in restraint of interstate ,
and foreign trade- and. an attempt to monopolize and. a
monopolization thereof within the first and second sections
of the act of Congress of July 2, 1890, entitled “An act to

ORIGINAL

ORIGINAL PETITION.

protect trade and commerce against unlawful restraints and
monopolies.”

2. That the court adjudge the Motion Picture Patents
Company and the General Film Company, severally and
respectively, to he a combination in restraint of interstate
and foreign trade and commerce in motion-picture films and
other articles relating to the motion-picture art, a restraint,
and an attempt to monopolize and a monopolization thereof,
and that the court direct a dissolution of each of said com¬
binations.

3. That the court adjudge the Motion Picture Patents
Company and the General Film Company, severally and
respectively, to be an unlawful instrumentality operated and
maintained by defendants solely for the purpose of carrying
into effect the illegal purposes of said contracts, combina¬
tions, and conspiracies in restraint of interstate trade
and commerce and of said attempts to monopolize, and
monopolies.

4. That the court adjudge that the various so-called
license agreements described in the petition, entered into be¬
tween the Motion Picture Patents Company and the 10 Patents
Company licensees, and the so-called license agreements
between the Motion Picture Patents Company and the General
Film Company, and the agreements between the General Film
Company and the 10 Patents Company licensees, and all other
license agreements referred to and described in the petition,
were devised, planned, entered into, and are now being observed
and enforced solely for the purpose of enabling the defendants
to carry into effect the objects and purposes of said unlawful
combination and conspiracy in restraint of said interstate and
foreign trade and commerce; that each of said agreements
be declared illegal, and be cancelled, and that, the dt.fon.i-
ants, and all and each of them, and their oflmers, agents,
servants, and employees, be enjoined and prohibited from

doing anything in pursuance or in furtherance of said agree¬
ments, and from enforcing in any manner said agreements,
or any of the terms thereof, in interstate and foreign
commerce.

5. That the court by way of an injunction restrain the
movement of the products of the 10 Patents Company
licensees and of the General Film Company in the channels
of interstate commerce until the decree of the court respecting
the Motion Picture Patents Company, the General Film Com¬
pany, and the said so-called license agreements has been
carried into effect by defendants and said Patents Company
and General Film Company dissolved and said agreements
canceled.

6. That the court adjudge that the patents named in the
so-called license agreements referred to and described in the
petition, now claimed to be held and owned by defendant
Motion Picture Patents Company, • were acquired, and are
now held by said defendant by virtue of such combination
and conspiracy in restraint of trade and commerce among
the several States and with foreign nations, and solely to
effectuate the unlawful objects and purposes of the same,
and that the said Motion Picture Patents Company, its offi¬
cers, directors, and agents, be enjoined .'from exercising or
attempting to exercise any control, direction, supervision,
or influence whatever over the interstate or foreign commerce
of the other defendants by virtue of said company holding
said patents or otherwise.

7. That the defendants and all and each of them be
enjoined, and prohibited from entering into or continuing
any similar combination or conspiracy, and from agreeing,
combining, conspiring, and acting together to prevent each
and any of them from carrying on interstate and foreign
trade and commerce in motion picture films and other arti¬
cles relating to the motion picture art in competition with the

ORIGINAL PETITION.

- y-

8. That the United States may have such other and fur¬
ther relief as the nature of the case may require and the
court may deem proper in the premises.

To the end, therefore, that the United States of America
may obtain the relief to which it is justly entitled in the
premises, may it please your honors to grant unto it writs
of subpoena directed to the said defendants: Motion Picture
Patents Company, General Film Company, the Biograph
Company, Thomas A. Edison (Inc.), Essanay Film Manu¬
facturing Company, the Kalem Company (Inc.), George
Kleine, Lubin Manufacturing Company, Melies Manufacturing
Company, Patlid Frfcres, Selig Polyscope Company, Vitagraph
Company of America, Armat Moving Picture Company,
Frank L. Dyer, Henry N. Marvin, J. J. Kennedy, William
Pelzer, Samuel Bong, J. A. Berst, S'icgmund Lubin, Gaston
Melies, Albert E. Smith, George K. Spoor, W. N. Selig, and
each and every one of them, commanding them and each
of them' to appear herein and answer, but not under oath
(answer under oath being hereby expressly waived), the
allegations contained in the foregoing petition and abide by
and perform such orders and decree as the court may make
in the premises.

John C. Swartley,
United States Attorney.

George W. Wickersham,

Attorney General.

James A. fowler,

Assistant to the Attorney General.

Edwin P. Grosvenor,

Special Assistant to the Attorney General.

Exhibit 1.

Charter of motion Picture Patents Company.

This is to certify that we, the undersigned, do hereby
associate ourselves into a corporation under and by virtue
of the provisions of an act of the legislature of tiie State of
New Jersey entitled “An act concerning corporations (re¬
vision of 189G),” and the supplements thereto and acts
amendatory thereof, for the purposes hereinafter mentioned,
hereby claiming for ourselves all the rights and privileges
now or hereafter granted by the laws of the State of New
Jersey to corporations, and to that end we do by this our
certificate set forth :

First. The name which we have assumed to designate
such corporation and to be used in its business and dealings
is “Motion Picture Patents Company.”

Second. The location of the principal office of the corpora¬
tion in this State is at No. 15 Exchange Place, Jersey City,
in the county of Hudson. The name of the agent therein
and in charge thereof upon whom process against the cor¬
poration may be served is Charles L. Carrick.

Third. The objects for which this corporation is formed
are to acquire by purchase, lease, pa/ment of royalties, or
otherwise, letters patent, inventions and improvements in
materials, processes, and apparatus relating to the produc¬
tion of negatives and positives for motion pictures, and also
relating to the photographing, developing, reproducing,
projecting, and exhibiting of scenes and objects at rest and
in motion; to mortgage, sell, lease, dispose of by agreement
or otherwise, such letters patent, licenses under letters
patent, and improvements, and to license others to use the
inventions covered by the said letters patent and to use such
improvements; to purchase, hold, sell, and convej*such real
and personal property as shall be lawful and adapted to the
requirements of the business of the company.

44 ORIGINAL PETITION, EXHIBIT 1.

This corporation shall also have power to conduct its busi¬
ness in all its branches and to have one or more offices and to
hold, lease, or convey real or personal property outside of the
State of New Jersey and in all other States and in all foreign
countries to which the business of the company may be here¬
after extended, and to do any acts or things designed to pro¬
tect, improve, or enhance the value of any of such patents
and of other property of the corporation.

Fourth. — The amount of capital stock of the company m
one hundred thousand dollars (§100,000) divided into one
thousand (1,000) shares of the par value of one hundred dol¬
lars (§100) each. The amount of capital stock with which
the company shall commence business is two thousand dol¬
lars (§2,000).

Fifth.— The names and post-office addresses of the incor¬
porators and the number of shares subscribed for by each are
as follows :

Hugh H. Harrison, Brook Haven, "n'-'y .

William H- Lane, 4 Boulevard, Westfield,' N. J. . . .' . . . " . . . . 5

Sixth.— The existence of this corporation shall begin on
the day of the filing of these articles of incorporation in the
office of the secretary , of state of New Jersey and shall con¬
tinue for a period of fifty (50) years from that date.

In witness whereof we have hereunto set our hands and
seals this 8th day of September, nineteen hundred and eight.

Hugh H. Haiuiison. [l. r.]
Geo. J. Murray. [l. s.]
William H. Lane. [l. s.]

In presence of Guernsey R. Jewett as to Hugh H. Harrison
Geo. J. Murray, and William H. Lane.

“Filed and recorded September 9, 1908.

“S. D. Dickinson,
“Secretary of State.”

Exhibit 2.

Preliminary Agreement lor Assignment of
Patents Between motion Picture Patents
Company and Edison Manufacturing Com¬
pany, December 18, 1908.

Agreement made this 18th day of December, 1908, by
and between the Motion Picture Patents Company, a cor¬
poration organized and existing under the laws of the State
of New Jersey, and having an office at Jersey City in said
State (hereinafter referred to as the “Patents Company”),
party of the first part, and the Edison Manufacturing Com¬
pany, a corporation organized and existing under the laws
of the State of New Jersey, and having an office at Orange
in said State (hereinafter referred to as the “Edison Com¬
pany”), party of the second part:

(1) Whereas the Edison Company represents that it is
the owner of all the right, title, and interest in and to reissued
United States Letters Patent No. 12037, dated September
30, 1902, and reissued United States Letters Patent No.
12192, dated January 12, 1904, and that there are no out¬
standing licenses under the said letters patent other than
those hereinafter referred to, and

(2) Whereas the Edison Company represents that it has
heretofore granted licenses in writing to manufacture and
use the inventions described and claimed in said reissued
Letters Patent No. 12037, and to manufacture and sell the
invention described and claimed in the said reissued Letters
Patent No. 12192, to the Vitngraph Company of America,
of New York; Slegmund Lubin, of Philadelphia; the Selig
Polyscope Company of Chicago; the Essanay Company
of Chicago; the Kalem Company of New York; and the
George Melics Company of Chicago, all dated January 31,
1908, and to Patlid Fibres of New York, dated May 20, 1908,
to go into effect June 20, 1908 (the licensees under snid
license agreements being hereinafter referred to as “Edison
Licensees”), and the Edison Company further represents

4G ORIGINAL PETITION, EXHIBIT 2.

that the said Edison Licensees are willing to suspend the
operation of the said licenses; and

(3) Whereas, the Edison Company represents that it
has heretofore entered into two agreements in writing,
dated May 20, 1908, with the Eastman Kodak Company, a
corporation of New York (hereinafter referred to ns the
“Eastman Company”), granting the right to the said East¬
man Company to supply “licensed film” to the Edison
Licensees, and that the Eastman Company is willing to
terminate the said agreements; and

(4) Whereas, the Patents Company represents that it
has an authorized capitalization of one hundred thousand
dollars (§100,000), of which twenty (20) shares of a par
value of §2,000 are outstanding, and whereas, the Edison
Company desires to acquire fifty thousand dollars (§50,000)
of the capital stock of the Patents Company, and is willing
to assign to the Patents Company all of its right, title,
and interest in and to the said reissued United States letters
patent and is willing to suspend the operation of the said
licenses granted thereunder, and to terminate the said
agreements with the Eastman Company, in consideration of
the payment to the Edison Company of forty-nine thousand
dollars (§49,000) of the capital stock of the Patents Com¬
pany, and one thousand dollars (§1,000) in cash, provided
that for the said one thousand dollars in cash, the Patents
Company shall have assigned to the Edison Company ten
(10) shares of the said capital stock at a par value of one
thousand dollars (§1,000) ; and

(5) Whereas, the board of directors of the Patents Com¬
pany has ascertained, adjudged, and declared that the said
right, title, and interest in the said reissued letters patent
free from the operation of the said licenses and agreements,
are of the fair value of fifty thousand dollars (§50,000) and
that the acquisition thereof is necessary for the business of
the Patents Company and to carry out its contemplated
objects,; and

(G) Whereas, the Patents Company represents that it lias
acquired or will acquire from the Vitagrapli Company of
America, of New York, all the right, title, and interest in and

ORIGINAL PETITION, DXniBIT 2. 47

to United States Letters Patent Nos. 673329, 744251, 770937,
771280, 785205, and 785237 (hereinafter referred to as the
“Vitagrapli patents”) all of which relate to motion picture
projecting machines, and has agreed to pay to the said Vita-
graph Company of America a royalty of one dollar (§1) on
each projecting machine embodying one or more of the inven¬
tions described and claimed in the said Vitagrapli patents
made and sold under any licenses for the manufacture and
sale of such projecting machines, granted by the Patents
Company (said royalties being hereinafter referred to ns
“Vitagraph royalties”) and also further represents that it
has acquired or will acquire from the American Mutoscopo
and Biograph Company, a corporation of New Jersey (here¬
inafter referred to as the “Biograph Company”), and the
Armat Moving Picture Company, a corporation of West
Virginia (hereinafter referred to as the “Armat Company”),
all the right, title, and interest in and to United States Let¬
ters Patent Nos. 578185, 580749, 58G953, 58891G, 629063,
673992, 707934, and 722382, nil of which relate to motion
picture projecting machines or cameras; and

(7) Whereas, the Patents Company represents that it con¬
templates deriving royalties under patents covering pro¬
jecting machines owned by the Patents Company from
manufacturers of projecting machines (hereinafter referred
to as “machine royalties”) ; royalties from exhibitors for the
use of projecting machines licensed under any or all of thq
patents covering projecting machines owned by the Patents
Company (hereinafter referred to os “exhibitors' royal¬
ties”), and royalties derived from manufacturers and import¬
ers of motion pictures under said reissued United States Let¬
ters Patent Nos. 12037 and 12192 (hereinafter referred to
as “dim royalties”) ; and

(8) Wherens, the Patents Company has agreed to pay to
the manufacturers and importers of licensed motion pictures,
except the Biograpli Company and the Edison Company, 24
per cent (24%) of the gross exhibitors royalties;

Now; therefore, this indenture witnesseth that:

(9) The Edison Company, in and by these presents, does
agree to assign, transfer, and set over unto the Patents

48 ORIGINAL PETITION, EXHIBIT 2.

ORIGINAL PETITION, EXHIBIT 2. 49

Company and its successors in business, tbe entire riglit,
title, and interest in and to tlie said reissued United States
Letters Patent, Nos. 1203T and 12192, and tlie inventions
described and claimed therein, and tlie right to sue for and
recover damages and profits for past infringement of the said
reissued letters patent and of each of them, and to enter into
agreements in writing with tbe said Edison Licensees sus¬
pending the operation of the licenses granted by the Edison
Company under tlie said reissued United States Letters
Patent to the said Edison Licensees, so long as the said
reissued letters patent are owned by the Patents Company,
and to enter into agreements in writing with the Eastman
Company terminating the agreements in writing referred to
in paragraph 3 hereof, so long as the said reissued letters
patent are owned by the Patents Company.

(10) The Patents Company hereby covenants and agrees,
in consideration of the said agreement of the Edison Com¬
pany, and upon the assignment of the said reissued letters
patent to the Patents Company, and upon the making of the
said agreements in writing by and between the Edison Com¬
pany and' the Edison Licensees and tne Eastman Company,
to issue to the Edison Company certificates of stock of the
Patents Company to the aggregate amount of four hundred
and ninety (490) shares, of a par value of forty-nine thousand
dollars ($49,000), and to pay to the Edison Company one
: thousand dollars ($1,000) in cash, and the Patents Company
further covenants and agrees that at the same time there
shall be assigned to the Edison Company for the said $1,000
in cash ten (10) shares of the capital stock of the Patents
Company at a par value of one thousand dollars ($1,000).

(11) The Edison Company covenants and agrees that it
has canceled or will cancel any licenses, shop rights, or
other rights which may have been heretofore granted under
either or both of tlie said reissued United States letters
patent to any person, firm, or corporation other than the
Edison Licensees, and the Edison Company further covenants
and agrees that it will save harmless in all respects the
Patents Company from any claim under any agreement, con¬
tract, or other obligation which the Edison Company or its

a title may have entered into or assumed with
any person, firm, or corporation concerning or involving any
licenses, shop right, or other right under any or all of the
said reissued letters patent.

(12) The Patents Company further covenants and agrees
that it will keep in separate accounts the incomes from film
royalties, from machine royalties, and from exhibitors’ royal¬
ties, and that the general and' contingent expense of the
Patents Company (which shall not include any expense in¬
curred in any litigation) shall not exceed fifty thousand
dollars ($50,000) in any one year. The Patents Company
further covenants, and agrees that on June 20, 1909, and at
the end of each and every year thereafter until the expira¬
tion of the said reissued United States -Letters Patent Nos.
12037, and 12192, and on August 14, 1914, the date of ex¬
piration of the said reissued letters patent, it will make
up the accounts of and distribute the said royalties for
the preceding year or portion thereof, as the case may be,
in the following manner :

First. From the machine royalties shall be deducted the 1
Vitagrapli royalties for payment to the Vitngrapli Company 1
of America, and from the exhibitors’ royalties shall be de- 1

ducted 24 per cent (24%) thereof for payment to the innnu- _ J

facturers and importers of licensed motion pictures.

Second. From the film royalties and the remainders of the
machine royalties and of the exhibitors’ royalties shall be de¬
ducted the general and contingent expense for the preceding
year or portion thereof, ns the case may be, together with any
expense for litigation which may have .been incurred by the
Patents Company, in shares proportioned according to the
ratio which each of said sums bears to tlie gross income of
the Patents Company for that year or portion thereof, the
remainders of such sums after the said deductions are made
being hereinafter referred to ns "net film royalties,” “net
machine royalties,” and “net exhibitors’ royalties,” re¬
spectively.

Third., The net film royalties, the net machine royalties,
and the net exhibitors’ royalties shall be paid to the trustee
:provided for in paragraph 14 of this agreement as a dividend

50 ORIGINAL PETITION, EXHIBIT 2.

upon the capital stock of the Patents Company and the said
trustee shall be instructed to divide and pay the said divi

dend in the following manner:

(а) To the Edison Company shall be assigned and p.i

an amount equal to the net film royalties. _

(б) The remainder of the dividend, up to an amount
equal to the net film royalties, shall be assigned and paid to
the Biograph Company and the Armat Company, respec¬
tively in the proportion of two-thirds (2/3) to the Biograph
Company and one-third (1/3) to the Armat Company.

(c) If any balance remains after the foregoing payment ,
it shall be divided and paid to the Edison Company, the
Biograph Company, and the Armat Company, m the pro¬
portion of one-half (%) to the Edison Company, on^Biml
(1/3) to the Biograph Company, and one-sixth (1/6) to the
Armat Company.

(13) The Patents Company further covenants and agrees
that, on August 31, 1915 (one year after 1 tbe date of the
expiration of reissued Letters Patent Nos. 12037 and 12192),
and at the end of each and every year thereafter, it will pay
to the trustee provided for in paragraph 14 of this agreement
all of its net profits for the preceding year, which consists
of the net machine royalties, the net exhibitors’ royalties and
the net sum of any royalties which the Patents Company
may collect in lieu of the present film royalties (such net
amounts being determined as provided for in paragraph 12
hereof) as a dividend upon the capital stock of the Patents
Company, and will instruct the trustee to divide the said
dividend and pay to the Edison Company therefrom an
amount equal to one-half (y2) of such dividend.

/(U) The Edison Company further covenants, and agrees
7 not to pledge, sell or otherwise dispose of its capital stock in
the Patents Company, except the minimum number of shares
sufficient to qualify one-half of the total number of directors
which the Patents Company may have, without the consent
IC'^of the Biograph Compnny and the Armat Company, and
VT ' the Edison Company further agrees to deposit its certificates
of stock in the Patents Company, except such as represent
the said qualifying shares for directors, with a responsible

ORIGINAL PETITION, EXHIBIT 2. 51

trust company named by the Patents Company, as trustee,
and to instruct the said trustee not to release, transfer, or fts
return the said certificates so deposited, without the consent j
of the Biograph Company and the Armat Company, - - - -

(15) It is further mutually covenanted and agreed by and
between the Patents Company and the Edison Company
that this agreement shall take effect on the date hereof, and
that if during the life of this agreement either party should
knowingly or through gross neglect or carelessness be guilty
of a breach, violation, or nonperformance of its covenants,
conditions, and stipulations, resulting in substantial injury
to the other party, and should for the period of thirty days
after notice thereof from the other party, persist therein or
fail to correct, repair, or remedy the same, then and in such'
case the party aggrieved may terminate this agreement by
giving thirty days’ notice in writing to the guilty party of
its intention so to do, and it is further mutually covenanted
and agreed that this agreement may also be terminated by
either of the parties hereto in case that the Patents Company
should become bankrupt, cease doing business, or should be
dissolved voluntarily or otherwise, or its charter should be
repealed. It is also further mutually covenanted and agreed
that, upon the termination of this agreement for any of the
foregoing causes, or any other cause, all of the right, title,
and interest in and to the said reissued United States Letters
Patent Nos. 12037 and 12192 shall be reassigned by the
Patents Company to the Edison Company for and in con¬
sideration of the sum of one dollar ($1).

In witness whereof, the parties hereto have caused this
agreement to be executed by their officers duly authorised
to perform these acts, the day and year first above written.

[seal.] Motion Picture Patents Company,

By H. H. Harrison, President.

Attest:

Geo. J. Murray, Secretary .

[seal.] Edison' Manufacturing Company,

•By Prank L. Dyer, Pice President.

Attest:

A; Westie, Secretary.

ORIGINAL PETITION, EXHIBIT 3.

Exhibit 3.

license Agreement Under the Camera and
Film Patents Between Motion Picture Pat¬
ents Company and Biograph Company,
December 18, 1908.

(a) This agreement, made this 18th day of December,
1908, by and between Motion Picture Patents Company,
a corporation organized and existing under the laws of the
State of New Jersey, and having an office at Jersey City,
in said State, party of the first part (hereinafter referred to
as the Licensor), and American Mutoscope and Biograpli
Company, a corporation organized and existing under the
laws of the State of New Jersey, and having an office at
New York City, party of the second part (hereinafter referred
to as the Licensee), witnesseth:

(b) Whereas, the Licensor represents that it is organized
to own, deal in, and grant licenses under letters patent
pertaining to the motion-picture art, and that it is the owner
of all the right, title, and interest in and to United States
Letters Patent-

No. 578185, dated March 2, 1897, for Yitascope, granted
to Thomas Armat;

No. 580749, dated April 13, 1897, for Vitascope, granted
to Thomas Armat;

No. 586953, dated July 20, 1897, for Phantoscopc,
granted to Charles F. Jenkins and Thomas Armat;

No. 588916, dated August 24, 1897, for Kinetoscope,
granted to Charles M. Campbell as the assignee of
Willard G. Steward and Ellis F. Frost;

No. 629063, dated July 18, 1899, for Kinetoscopic,
Camera, granted to American Mutoscope Company
as the assignee of Herman Caslet;

No. 073329, dated April 30, 1901, for Kinetoscope,
granted to the American Vitagraph Company as the
assignee of Albert E. Smith;

No. 673992, dated May 14, 1901, for Yitascope, granted
. to Thomas Armat;

No. 707934, dated August 26, 1902, for Projecting
Kinetoscope, granted E. & H. T. Anthony & Co. as
assignees of Woodvillo Latham;

No. 722382, dated March 10, 1903, for Animated Pic¬
ture Apparatus, granted to American Mutoscope &
Biograph Company as the assignee of John A. Pross;

No. 744251, dated November 17, 1903, for Kinetoscope,
granted Albert E. Smith;

No. 770937, dated September 27, 1904, for Kinetoscope,
granted the Vitagraph Company of America as the
assignee of Albert E. Smith ;

No. 771280, dated October 4, 1904, for Winding-Eeel
granted Albert E. Smith;

No. 785205, dated March 21, 1905, for Flame-Shield for
Kinetoscopes, granted the Vitagraph Company of
America as the assignee of William Ellwood ; and

No. 785237, dated March 21, 1905, for Film-Holder for
Kinetoscopes, granted the Vitagraph Company of
America as the assignee of Albert E. Smith ;
all of which said letters patent relate to improvements in
the motion picture art, and that there are no outstanding
licenses, shop rights, or other rights under said letters patent,
or either of them, except a license for Parlor Kinetoscopes
granted the Karmata Company, of Washington, D. C.,
under Letters Patent Nos. 578185, 580749, 586953, and
673992, and certain alleged licenses under U. S'. Letters
Patent No. 586953, which are in dispute, claimed to be
owned by the Edison Company and the American Grapho-
plionc Company, of Washington, D. C., and S. Lubin, of
Philadelphia, Pennsylvania; and excepting a license granted
by the American Mutoscope & Biograpli Company to the
firm of Marvin and Casler to manufacture and sell cameras
and exhibiting or projecting machines under letters patent
owned by it (some of which are hereinbefore referred to)
for use in foreign countries only, and excepting certain
licenses granted by the Armat Motion Picture Company to
the American Mutoscope & Biograpli Company under

54 OHIGINAL PETITION, EXHIBIT 3.

Letters Patent Nos. 57S1S5, 580749, 58G953, 58S91G, and
G73992, and by the latter company to the former company
under Patents Nos. 707934 and 722382, which licenses are,
however, by agreement between said parties, suspended and
are not to be acted upon until the Licensor becomes bank¬
rupt, ceases doing business, or shall be dissolved voluntarily
or otherwise, or its charter shall be repealed; and

(o) Whereas, the Licensor is the owner of all the right,
title, and interest in and to reissued Letters Patent of the
United States Numbered 12037, dated September 30, 1902,
and 12192, dated January 12, 1904, the original Letters Pat¬
ent whereof are Numbered 589108 and dated August 31, 1897,
and that there are no outstanding licenses, shop rights, or
other rights under said reissued letters patent, or either of
them, except license agreements thereunder between the
Edison Company and Pathe Freros of New York, dated May
20, 1908 (to go into effect June 20, 1908), and between the
Edison Company and the Kalem Company, of New York; the
Essanay Company, of Chicago; Siegmund Lubin, of Phila¬
delphia; George Melics Company, of Chicago, Illinois; the
Selig Polyscope Company, of said Chicago, and the Vitagrapli
Company of America, of New York, all dated January 31,
1908; and

(d) Whereas, the Edison Company, the Licensee and the.
other licensees before mentioned under the said reissued
Letters Patent, Numbered 12037 and 12192, hnve suspended
the operation of the said license agreements; and

(o) Whereas, the Licensee is engaged in the manufacture
and sale of motion pictures, including the printing of positive
motion pictures from negntive motion pictures of the
Licensee’s own production, and, relying upon the aforesaid
representations of the Licensor, and induced thereby, desires
to obtain from the Licensor a license under said two reissued
Letters Patent Numbered 12037 and 12192, and Letters
Patent Nos. G29003 and 707934, and to lease positive motion
pictures for use in exhibiting or projecting machines contain¬
ing the inventions, or any of them, described and claimed in
said Letters Patent Nos. 57S185, 680749, 580953, 58891G,
G73329, 673992, 707934, •• 722382, 744251, 770937, 771280,

OBIGINAL PETITION, EXHIBIT 3. 55

785205, and 785237, and to sell positive motion pictures on
film of a width approximately one (1) inch or less in certain
territory and on film of any width in certain territory :

(/) Now therefore, the parties hereto, for and in considera¬
tion of the sum of one dollar to each in hand paid by the
other, and for other good and valuable considerations from
each to the other moving, receipt of all of which is hereby
acknowledged, have agreed as follows :

1. The Licensor hereby grants to the Licensee for the tem
and subject to the covenants, conditions, and stipulations
hereinafter expressed, the right and license under said
reissued Letters Patent No. 12037 and Letters Patent Nos.
6290G3 and 707934, for the United States, its territories,
dependencies, and possessions (hereinafter called the “terri¬
tory aforesaid”) to manufacture and use such a number of
cameras embodying the inventions of said reissued Letters
Patent No. 12037 and Letters Patent Nos. 029003 and 707934,
as may be necessary for the proper conduct of the Licensee’s
business, and to manufacture, print and produce positive
motion pictures embodying the inventions of said reissued
Letters Patent No. 12192, and to lease the same in the United
States, its territories, dependencies, and possessions (with the
exceptions of its insular possessions and Alaska), hereinafter
referred to ns the “lease territory aforesaid,” on film of a
greater width than approximately one (1) inch, upon condi¬
tion that they be used solely in exhibiting or projecting
machines containing the inventions or some of them of said
Letters Patent Nos. 578185, 580749, 580953, 588916, G73329,
673992, 707934, 722382, 744251, 770937, 771280, 785205 and
785237, and licensed by the Licensor, and to sell positive
motion pictures embodying the invention of said reissued
Letters Patent No. 12192, on film of a width approximately
one (1) inch or less in the “lease territory aforesaid”: and on
film of any width in or for said insular possessions and Alaska
and foreign countries, hereinafter referred to as “said export
territory” or “for export.”

The Xiccnse hereby granted is personal to the Licensee
and docs not include the right to dispose of, in the “territory
aforesaid,” any cameras embodying any invention covered
65498-12 — 8

Jfc

5C OltlGINAL PETITION, EXHIBIT 3.

by said reissued Letters Patent No. 12037 and Letters
Patent No. G290G3 and 707934; and, in the event of the
permanent discontinuance or retirement from business of
the Licensee for a period of six consecutive months, the
license hereby granted shall he immediately terminated.

2. The Licensor, for itself, its successors, assigns and legal

representatives, hereby releases, acquits, and discharges the
Licensee from any and all claims, demands, and liability for
profits and damages, because of any infringement by the
Licensee of any or all of the aforesaid United Letters Patent
Nos. 578185, 580749, 58G953, 58891G, G290G3, G73329,

673992, 707934, 722382, 744251, 770937, 771280, 785205,

and 785237, and reissued Letters Patent Nos. 12037 and
12192, or use by the Licensee of the inventions, or any of
them, covered by said letters patent or either of them prior
to the date hereof.

3. The Licensee hereby recognizes and admits the validity

of said reissued Letters Patent No. 12037, so far as the first
three claims thereof are concerned, and the validity of said
reissued Letters Patent No. 12192 and Letters Patent Nos.
578185, 580749, 586953, 58891G, 629063, 673329, 673992,

707934, 722382, 744251, 770937, 771280, ' 785205, and

785237, and the Licensee agrees not to contest or question
the same during the continuance of this agreement.

4. The Licensee covenants and agrees that in the manu¬
facture of motion pictures, both negative and positive in the
"territory aforesaid,” during the continuance of this agree¬
ment, the Licensee will use exclusively sensitized film manu¬
factured and sold in the United States by a manufacturer
or manufacturers authorized by the Licensor, such sensi¬
tized film hereinafter called “licensed film,” nnd that the
Licensee will not, in the “territory aforesaid,” purchase or
otherwise acquire or lease or sell or otherwise dispose of or
deal in, motion pictures produced on or by the use of any
other film than such “licensed film,” nor sell or otherwise
dispose of any negative motion pictures.

The Licensor further covenants nnd agrees that it will,
in an agreement in writing with each manufacturer of
“licensed film,” obligate such manufacturer, so long ns

OltlGINAL PETITION, EXHIBIT 3. 57

the latter has the exclusive right to make and sell such
“licensed film,” not to knowingly furnish or sell, in the
“territory aforesaid,” except “for export,” sensitized film
for the commercial production of negative and positive
motion pictures to anyone but the Licensee, and the addi¬
tional licensees hereinafter provided for, except to the
extent of 2% per cent of the total amount of such “licensed
film” supplied by such manufacturer to the parties to the
license agreements referred to in paragraph (c) during the
year preceding June 20, 1909, and to the Licensee and the
additional licensees hereinafter provided for, during any
one year thereafter during the continuance of such agree¬
ment, which amount such manufacturer shall have the right
to furnish or sell, in the “territory aforesaid,” to persons
not engaged in the business of manufacturing, leasing, sell¬
ing, loaning, renting out, or otherwise disposing of or dealing
in motion pictures in the “territory aforesaid”; and with
the further exception flint such manufacturer may also
reserve the right to manufacture and sell sensitized film
suitable for the commercial production of negative and
positive motion pictures, of a width not to exceed approxi¬
mately one (1) inch in the “territory aforesaid,” to persons,
firms, and corporations engaged in the business of manufac¬
turing, leasing, selling, loaning, renting out, or otherwise
disposing of or dealing in motion pictures in the “territory
aforesaid,” but upon the condition that in case any of them
produces thereon any picture greater in size than approxi¬
mately three-quarters (%) of an inch on n line cither parallel
to or at right angles to the edge of such film, and such
manufacturer has knowledge thereof, such manufacturer
will cease supplying such film to any person, firm, or cor¬
poration so doing; and with the further exception that such
manufacturer may also reserve the right to manufacture
and sell in the “territory aforesaid” such sensitized film
suitable for the commercial production of negntive nnd posi-'
tive motion pictures of any width, to persons, firms, and
corporations now having an established business of manu¬
facturing motion pictures in any country foreign to the
United States, who now manufacture negative and positive

motion pictures in, the, United! States, on who. may, after the,
" £ agreement commence the manufacture oD nega-
^e or positive0 motion, pictures in the United States

Tlie. Licensor further covenants and agrees ^ J
royalties which it will charge to and receive from the Licensee
for “licensed, film” (,and which, are to. be included, by to
manufacturer or manufacturers in the prices, charged f
“tensed fllt> to the Licensee and- paid over to. the Lmenson),
shall not for “licensed film” of a width approximately
one inch and, three-eighths of, an inch or- thir.ty,ave

(351, millimeters, purchased by the Licensee, during to yean

during the continuance of, this agreement, as hereafter
provided; exceeding the following rates; that is to- say,:

Tto’ shipments, of such, “licensed film” to the Licensee
or the Licensee's orders, for any, such, year be. four million,
running feet or less, a royalty of one-half (i/2). cent per run-
nine foot on the total, number of running feet for that year,,
if such shipments, on the Licensee’s orders, of. such “licensed,
filin’’ for any such year exceed four million, running, feet
but do not exceed six million, running feet, a royalty of. four
and one-half (-4%-): mills per running foot on. the, total number
of running feet for that year; if such, shipments, on the
Licensee’s orders, of such, “licensed- film!’ for any such year,
exceed six million running feet but do, not exceed, eight
million running feet, a royaltyof four (4), mills- per running;
foot on. the total- number, of winning feet for tlmt year; if
such shipments, on the- Licensee’s, orders, of. such, “licensed,
film” for. any such yenr exceod, eight, million, running feet
but do not exceed ten million, running, feet, a, royalty of. three,
and three-quarters (33/,,) mills per running, foot on the. total-
number- of running feet for tlmtr year;. and, if such. shipments,,
on the- Licensee’s orders, of snoli. “licensed, film!’ for. any
such; year exceed ten, million, running feet, a» royalty, of three
and, one-quarter (3%) nulls- per. running foot on the total-
number of running, feet for that year. And, for “licensed,
film’’ narrower or widor than approximately one and- throe-
eighths (13/S im) inch- or thirty-five (35) millimeters,, the
nbove-montioned royalty rates- shall, he reduoed or increased

ORIGINAL PETITION, EXHIBIT 3. 59

in proportion to to reduction or increase in width of such
narrower or -wider “licensed film” below or above the
width of such “licensed fllm” of approximately one and
three-eightlis (1% in.) inch or thirty-five (35) millimeters.

The Licensor and Licensee further mutually covenant
and agree that the manufacturer of such “licensed Him”
shall in to first instance— that is to say, when such film is
hilled and shipped by it— charge the Licensee with its price
per running foot plus the maximum royalty aforesaid, and
on the expiration of each year, counting from June 20tli,
1909, shall adjust the royalty account of the Licensee as to
“licensed film” so billed and shipped to and paid for by
to Licensee, according to the royalty schedule aforesaid,
returning to to Licensee any amount the Licensee shall
have overpaid, according to said schedule, and paying the
balance to to Licensor; and that the royalties which may
hereafter be paid to the manufacturer of such “licensed
film” after the date hereof and up to June 20, 1909, under
this agreement, shall he adjusted and the excess returned,
in the same manner, the royalty rate to be charged for such
period being to rate that would have been charged if the
shipments of “licensed film” to the Licensee had been
continued for a year at the same rate at which shipments
were made for such period.

The Licensor further agrees that the dealings between
the Licensee and the authorized manufacturer or manu¬
facturers from whom the Licensee purchases such “licensed
film” shall, in so far ns the number of running feet ordered
by or shipped to the Licensee or anything that would indi¬
cate or disclose the number of such feet is concerned, be a
matter of confidence between the Licensee and such manu¬
facturer or manufacturers, who shall hot be at liberty to
disclose, and moreover shall be bound in writing not to
disclose, directly or indirectly, to the Licensor or any of
the additional licensees hereinafter provided for, the num¬
ber of such feet of “licensed film” so ordered by or shipped
to the Licensee; the Licensor further agreeing to so arrange
or provide for the reports and royalty payments to be made
to : it by such manufacturer or manufacturers that tlie

CO ORIGINAL PETITION, EXHIBIT 3.

latter shall make such reports and royalty payments in
gross as to all of the licensees to whom shipments of such
“licensed film” are made, and without specifying the
number of running feet of “licensed film” so shipped to any
of them, either by a statement in writing of the number of
such feet or the amount of royalties paid or to be paid by
such manufacturer or manufacturers for or on account
thereof.

The Licensor and Licensee further mutually covenant
and agree that no royalty other than or in addition to that
provided for in this paragraph shall be charged to or col¬
lected from the Licensee by the Licensor up to Juno 20,
1910, or during any renewal of this agreement up to August
31, 1914, the date of the expiration of said reissued Letters
Patent Nos. 12037 and 12192, and no royalty whatever
shall be charged to or collected from the Licensee by the
Licensor after cither the first, second, and third claims of
said reissued Letters Patent No. 12037 and cither of the
claims of said reissued Letters Patent No. 12192, in any
suit as hereinafter provided for, for infringement thereof,
are held invalid by a court that last hears and decides
such suit, or after August 31, 1914, during any renewal of
this agreement; and that the Licensor shall charge royalties
or rents for the use of all exhibiting or projecting machines
capable of exhibiting or projecting motion pictures on film
of a width greater than approximately one (1) inch, con¬
taining the inventions, or any of them, described and claimed
in the aforesaid Letters Patent Nos. 578185, 580749, 58G953,
58891G, 673329, G73992, 707934, 722382, 744251, 770937,
771280, 785205, and 785237, licensed by the Licensor and
that all such royalties or rents shall be collected by the
Licensor, directly or indirectly from the exhibitors using such
machines, and shall be fixed by the Licensor and charged and
collected from such exhibitors by the Licensor at such a rate
as to average as nearly as possible a royalty or rental of
two dollars (52.00) per week for each such licensed machine
in use.

5. The Licensee further covenants and agrees not to sell
dr otherwise dispose of or offer for sale, in the “territory

ORIGINAL PETITION, EXHIBIT 3. G1

aforesaid,” unexposed positive or negative “licensed film”
during the continuance of this agreement; but this provision
shall not prevent the Licensee from selling as refuse, in the
“territory aforesaid,” second-hand positive or negative
motion pictures or motion pictures which have been used or
become shopworn or in any way damaged, to a manufacturer
or manufacturers of “licensed film” or to a manufacturer to
manufacture other articles than film therefrom, but only
after they have been rendered by the Licensee unsuitable for
use as motion pictures by cutting or otherwise defacing
them; or from selling exposed positive or negative film
(either waste or in rolls) known as “blank film” for use by
dealers, renters, or exhibitors for leaders or for spacing or
for similar purposes, but which shall not and can not be
otherwise employed for the exhibition of motion pictures.

G. The Licensee further covenants and agrees not to lease,
loan, rent out, sell or offer for sale, or otherwise dispose of in
the “territory aforesaid,” motion pictures to anyone pur¬
chasing or otherwise obtaining, leasing, using, loaning,
renting out, selling, offering for sale, or otherwise disposing
of or dealing in motion pictures containing the invention of
said reissued Letters Patent No. 12192, not the output of the
licensee or of the additional licensees hereinafter provided
for. .

7. The Licensee further covenants and agrees to mark
each and every camera which the Licensee may make or
use under this agreement embodying the inventions of
reissued Letters Patent No. 12037, Letters Patent Nos.
G290G3 and 707934, or either of them, with the word “Pat¬
ented” followed by the dates of grant of all of the said
letters patent, the inventions claimed in which are embodied
in the said camera or apparatus, and to photographically
print the Licensee’s trade-mark in each picture of at least
one scene of each subject of positive motion pictures on
film of a greater width than . approximately one (1) inch
manufactured by the Licensee and leased in the “lease
territory aforesaid,” and to mark conspicuously on the
labels which shall be placed on boxes or packages containing
positive motion pictures on film of a greater width than

G2 ORIGINAL PETITION, EXHIBIT 3.

approximately one (1) inch manufactured by the Licensee
in the “territory aforesaid,” with the following words and
figures :

LICENSED MOTION PICTCBE. ; ■

Manufactured and leased by and property of

(Patented in the United States August 31, 1S97; reissued
January 12, 1904).

The enclosed motion picture is leased only and upon the
following terms and conditions :

1. That the lessee shall not sell or otherwise dispose of '
the same outright, but shall have only the right to sublet
or use such motion picture.

2. That the lessee shall permit such motion pictures to be
exhibited only on motion picture projecting machines
licensed by the Motion Picture Patents Company of New
Jersey under its patents covering such projecting machines.

3. That the lessee shall not sublet such motion picture or
any other motion picture containing the invention of the

above reissued patent for use in any motion-picture exhibi- I

tions at a lower subrental price, directly or indirectly, than
that agreed upon (if any) in the contract of lease between the
lessee and the lessor of this picture.

4. That the lessee or user thereof shall not make or permit
others to make any reproduction, commonly known as a
“dupe,” of such motion picture or any other motion picture
containing the inventions of the above reissued patent.

5. That the lessee or user thereof shall not remove the
trade-mark or trade name or title therefrom.

0. That the violation of any of the foregoing conditions
entitles the lessor to immediate possession of this motion
picture without liability for any price which the lessee or
the person in whose possession it is found may have paid
therefor.

The Licensor further covenants and agreed to use all
possible diligence in licensing exhibiting or projecting
machines now in use in the “lease territory aforesaid”

ORIGINAL PETITION, EXHIBIT 3. 03

embodying any or all of the inventions described and claimed
in the said Letters Patent Nos. 578185, 580749, 58C953,
58891G, 673329, 073992, 707934, 722382, 744251, 770937,
771280, 785205, and 785237, and that royalties or rents from
the users of such exhibiting or projecting machines will not
be exacted, directly or indirectly, until February 1st, 1909.

8. The Licensee further covenants and agrees not to use,
in the production of negative or positive motion pictures,
under this agreement, the negative or positive motion
pictures (or reproductions commonly known as “dupes”
of the negative or positive motion pictures), of any other
manufacturer or person, firm, or corporation located either
in the “territory aforesaid” or in any foreign country,
whether the same have or have not been copyrighted in the
“territory aforesaid” or in any foreign country.

9. The Licensor has established the following scale of mini¬
mum prices (which the Licensee admits is a fair and reasona¬
ble one) for the lease of positive motion pictures on film of a
greater width than approximately one (1) inch in the “lease
territory aforesaid” embodying the invention of said
reissued Letters Patent No. 12192:

hist . 13 cents per running foot.

Standing order. . 11 cents per running foot.

Films leased between two andfour months aftor release

Films leased between four and six months after release

date... . 7 cents per running foot.

Films leased over six months ofter release date . 5 cents per running foot.

The Licensor and Licensee further mutually covenant
and agree that the above scale of minimum prices is to remain
in force until a new scale of prices is adopted, each such
new scale to: be adopted, during the continuance of this
agreement, by a majority vote to be forthwith communi¬
cated to the Licensor of the Licensee and the several addi¬
tional licensees hereinafter provided for, or such of them ns
may at the time be licensees on the basis of one vote for
each thousand running feet of new subjects on film of a
greater width than approximately one (1) inch offered for
lease or sale in the “territory nforesnid” by ench licensee
.during the year preceding the taking of such vote; anil
55498 -12-—9

. - . . . -i.

G4 ORIGINAL PETITION, EXniBIT 3.

they further covenant and agree that any changes which
may hereafter be so made and communicated to the Licensor
in said scale of prices, and of which the Licensee shall be
notified in writing by the Licensor, shall be accepted and
adopted by the Licensee in the place and stead of the scale
of prices above given or of any substitute or substitutes
therefor adopted prior to such change. It is, however,
expressly mutually covenanted and agreed that in no case shall
such new scale of prices, either list or standing order, be
less than nine (0) cents per running foot for any motion
picture leased within four months of the date of release of
the said motion picture.

By the expression “running feet of new subjects” above
referred to, and hereafter used, the parties hereto mean
the aggregate amount ascertained by adding together the
individual number of running feet of one print of each and
every new motion picture on film of a greater width than
approximately one (1) inch, regularly listed and offered for
lease in the “lease territory aforesaid.”

The Licensor and Licensee further mutually covenant and
agree that in case, during the continuance of this agreement,
there should be for any reason only three such licensees, i

then, and in such case, the Licensor may adopt a minimum
scale of prices in the place and stead of the minimum scale of
prices above given or of any substitute or substitutes there¬
for adopted in the manner above provided, which, however,
shall in no case be above the minimum scale of prices that
may be in force at the time the Licensor adopts the said new
minimum scale of prices, which said new minimum scale of
prices shall be binding upon the Licensee, but only after
receiving notice thereof in writing from the Licensor.

10. The Licensor and Licensee further mutually covenant
and agree that an order in the “lease territory aforesaid,”
for one or more positive motion pictures of each and every
new subject made by the Licensee (except clirono-photo-
graphic subjects and other special subjects that are an¬
nounced and advertised as special by the Licensee and of
which no copy or print is leased by the Licensee for less than
list price within two (2) months' after release date) when

ORIGINAL PETITION, EXUIBIT 3. Go

offered for lease in the regular order of business, shall con¬
stitute a “standing order” within the meaning of the scale of
prices aforesaid or any substitute therefor hereafter adopted,
said standing order to remain in force for not less than four¬
teen (14) consecutive days; and the parties hereto further
mutually covenant and agree that the minimum price at
which any additional positive motion pictures shall be leased,
in the “lease territory aforesaid,” subsequent to the filling
of a standing order, shall be the same per running foot as the
pictures furnished on such standing order, unless otherwise
provided for in the scale of prices aforesaid or any substitute
therefor hereafter adopted. All positive motion pictures
which, may be hereafter leased in the “lease territory afore¬
said,” to persons not having a standing order, as above
defined, shall in every case be leased at not less than the list
price mentioned in said scale of prices or any substitute
therefor hereafter adopted, except it be otherwise provided
by a majority vote of the Licensee and the several additional
licensees hereinafter provided for, or such of them as may
at the time be licensees, on the basis of one vote for each
thousand running feet of new subjects, on film of a greater
width than approximately one (1) inch, offered for lease or
sale in the “territory aforesaid” by each licensee during the
year preceding the talcing of such vote, and except as pro¬
vided for in paragraph 12 as to “special motion pictures.”

11. The Licensor and Licensee further mutually covenant
and agree that positive motion pictures made by or for the
Licensee and unsold prior to the date hereof, shall be subject
to. the scale of prices aforesaid and shall be leased in the
‘Hease territory aforesaid” at not less than the prices fixed
in said scale for positive motion: pictures as provided 'for in
paragraphs 9 and 10.

12. The Licensor and Licensee further mutually covenant '
and 'agree that in the case of so-called “special motion pic-

Etures” (where it is ngreed by the Licensee that the negative
shall lie the exclusive property of the person ordering the
same, although remaining in the care and i custody of the'
Licensee, and where positive prints therefrom shall be made
from time to lime on the order of such person), the price to

6G OHIO INAL PETITION, EXHIBIT 3.

be paid for the making of sncb negative in the “territory
aforesaid” shall not be less than one dollar- ($ff) per running
foot, and that the price at which positive prints therefrom
shall he leased in the “territory aforesaid,” shall not be less
than fifteen (15) cents per running foot

13. The Licensee further covenants and agrees not to lease
motion pictures in the “lease territory aforesaid,” under any
circumstances, either directly or indirectly, during the con-
tinuance of this agreement, at lower prices than those fixed
and 1C2StnWislled as provicle(1 for in paragraphs 0, 10, 11,

14. It is further and mutually covenanted and agreed by
the Licensor and Licensee that the Licensee shall have the
right to sell motion pictures in or for “said export territory,”
and that the prices above referred to in paragraphs 0, 10 11
and 12, or any substitute or substitutes for the same hereafter
adopted, shall not apply to sales or shipments of motion
Pictures made bona fide for export, when the goods, addressed
to the purchaser, agent, or consignee, are delivered to the
vessel or to a transportation company for transportation to

said export territory,” and not otherwise.

The Licensor and Licensee further mutually covenant and
agree that in no case shall sales “for export” of motion pic¬
tures be knowingly made by the Licensee to persons, firms
or corporations whom such Licensee has reason to believe
sale rr tllem int° tIla <<lea8e tepritol7 aforesaid” for

15. The Licensor and the Licensee further mutually

covenant and agree that, except as provided for in para¬
graph 5, the Licensee will not sell or lease, or offer for sale
or lease m the “territory aforesaid” at reduced prices,
second-hand motion pictures or motion pictures which have
damaged ^ ^ bGC°me Sh°P'Vorn or “ any way

16. The Licensor and the Licensee further mutunllv

covenant and agree that in the 'dense territoiy aforesaid ”
all leases of positive motion pictures shall be at the prices
hereinbefore provided for, without the allowance of an? dis-
counts or rebates or other reduction (except such as may he

ORIGINAL PETITION, EXHIBIT 3. 67

adopted by the unanimous votes of all the licensees) by which
a lessee might acquire positive motion pictures at lower
prices than those set forth in Paragraphs 9, 10, 11, and 12,
or any substitutes therefor hereafter adapted, and that the
Licensee will not dispose of such positive motion pictures os
premiums, or by lottery, or raffle, or any game of chance,
or in any way whereby they may be acquired directly or
indirectly for less than the prices set forth in paragraphs 9,
10, 11, and 12, or substitutes therefor.

The Licensee further covenants and agrees that, in the
“lease territory aforesaid,” the Licensee will not sell or offer
for sale other goods or merchandise at less than current
prices in order to induce the lease of positive motion pictures,
nor present or donate other goods or merchandise or prizes,
or make use of credit cards or trading stamps, or offer any
premiums of any kind whatsoever to induce the lease of
such positive motion pictures.

17. It is further mutually covenanted and agreed by and
between the Licensor and Licensee that no lease of positive
motion pictures on film of a greater width than approxi¬
mately one (1) inch shall be made in the “lease territory
aforesaid” by the Licensee, except upon and subject to the
following terms and conditions, the substance of which (with
the exception of the condition as to the return of positive
motion pictures hereinafter referred to) shall be expressed
in a printed notice on the labels, as provided for in para¬
graph 7, accompanying each positive motion picture, namely :
(l).That the lessee of such positive motion picture shall not
sell or otherwise dispose of the same outright, but shall only
have the right to use such positive motion picture in giving
motion-picture exhibitions in machines licensed by the
Licensor under the said letters patent Nos. 578185, 580749,
5S6953, 5SS916, G73329, 673992, 707934, 722382, 744251,
770937, 771280, 785205, and 785237, or one or more of them,
or under any other letters patent that it may hereafter
acquire or control, or to sublease such motion picture for
use in such machines, and that (2) the lessee shall not make
or permit others to make any reproduction commonly known
ns a “dupe” of such positive motion picture or any other

ORIGINAL PETITION, EXHIBIT 3.

positive motion picture containing the invention of said
reissued letters Patent No. 12192, or (3) sublease the same
or any other positive motion picture on film of a greater
width than approximately one (1) inch containing the inven¬
tion of said reissued Letters Patent No. 12192, for use in
giving motion-picture exhibitions at a lower lease price
directly or indirectly than that prescribed by the Licensee
at the time of the lease of such motion picture, and (4) that
the lessee of such positive motion picture shall not remove
the trade mark or trade name or title therefrom, and (5) that
the lessee shall return to the Licensee from whom such posi¬
tive motion picture has been leased (without any payment
therefor except the transportation charges incident to the
return of the same) on the first day of every month, begin¬
ning with February 1, 1909, an amount of positive motion
pictures (on film of a greater width than approximately one
(1) inch) in running feet ' (not " leased by the Licensee over
six months before) and of the make of 'the licensee, to whom
it is returned, equal to the amount that was so'leascd during
the sixth month preceding the date of each such return;
with the exception, however, that where any such positive
motion pictures are destroyed by fire or lost in transportation,
and proof satisfactory to the Licensee is furnished as to such
destruction or loss, the amount so destroyed or lost shall be
deducted from, the amount to be returned, as aforesnid.

It is further mutually covenanted and agreed by and be¬
tween the Licensor and Licensee that the subleasing price
aforesaid; for subleasing of positive motion pictures, on film
of a greater width than approximately one (1) inch, shall he
Axed (and which may be changed in the same manner during
the continuance of this agreement, ns may also the fifth con-'
dition before recited .in this paragraph) by a majority vote
of the Licensee and the several additional licensees hereinafter
provided for or such of them as may at the time be licensees,
on the basis of one vote for each thousand running feet of new
subjects, on film of a great* width than approximately one
(1) .inch, offered for lease;* sale in the “tereitnry aforesaid”'
the year1 preceding the .'taking of
such vote. . • ■*'.

OBIQINAL POTITION, EXHIBIT 3. G9

The Licensee further covenants and agrees that in the
“lease territory aforesaid” the Licensee will not discriminate
in favor of any lessee, or place upon any motion pictures any
restrictions other than those specified in this paragraph and
paragraph 7 hereof, unless authorized by a majority vote of
the Licensee and the several additional licensees hereinafter
: provided for, or such of them as may at the time bo licensees.

18. The Licensee covenants and agrees that in the “lease
territory aforesaid” the Licensee will dispose of the positive
motion pictures, on film of a greater width than approxi-
,! mately one (1) inch, manufactured, produced, or printed by

the Licensee, only by the sale “for export,” and shipment
i thereof into “said export territory” or by the lease thereof

to others for the purpose only of either subleasing the same
to persons, firms, or corporations using such motion pictures for
giving exhibitions thereof in exhibiting or projecting machines
licensed by the Licensor containing the inventions, or some of
J them, described and claimed in said Letters Patent Nos.

hi 578185, 580749, 580953, 588910, G73329, G73992, 707934,

t,{ 722382, 744251, 770937, 771280, 7S5205, and 785237, or in

letters patent herenfter acquired or controlled by the Licensor,
or of using the same in such machines so licensed ; nnd will not
use the same for the purpose of giving exhibitions thereof for
profit, directly or indirectly; it being expressly understood
nnd agreed by and between the Licensor and Licensee, how¬
ever, that the Licensee shall be at liberty to give exhibitions
of such positive motion pictures without profit, directly or
indirectly, and to possible or prospective lessees or pur¬
chases thereof; and the Licensee further covenants and
agrees not to knowingly allow positive motion pictures, on
film 'of-'a greater width than approximately one (1) inch,
manufactured by the Licensee under this agreement, to be
leased for use with any exhibiting or projecting machine not
licensed by the Licensor under the letters patent mentioned
in this paragraph, and that it may hereafter acquire or control,
or one dr more of them, except by and with the consent of the
Licensor; and also to refrain from supplying ; such motion
pictures manufactured ' or imported under this agreement,
for use with any exhibiting or projecting machine the

TO ORIGINAL PETITION, EXHIBIT 3.

license for which, under the aforesaid letters patent, or one
or more of them, has been terminated, and the Licensee has
been notified thereof by the Licensor; and also to refrain
from supplying such motion pictures manufactured and im¬
ported under this agreement to any lessee who may sublet
such motion pictures to persons, Arms, or corporations using
the same for giving exhibitions thereof in exhibiting or
projecting machines not licensed by the Licensor as afore¬
said, or the license for which has been terminated and the
Licensee has been notified by the Licensor that any such
lessee continues to so sublet such motion pictures after being
notified by the Licensor not to do so; and the Licensor
covenants and agrees to promptly notify any such lessee
who may so sublet such motion pictures, after it has knowl¬
edge of any such subletting, and to notify the Licensee and
the additional licensees hereafter provided for, or such of
them os may at the time be licensees, of the termination of
any license for the use of any exhibiting or projecting ma¬
chines under the aforesaid letters patent, or any of them, and
of any such lessee who may so sublet such motion pictures,
after being notified by it not to do so, nnd to compel nil such
additional licensees to refrain from supplying motion pic¬
tures for use with any such exhibiting or projecting machine
the license for which lias been so terminated, or to any such
lessee.

19. The Licensor and Licensee further mutually covenant
and agree that the Licensor shall and will, during the con¬
tinuance of this agreement, promptly institute suits against
any and all infringers of the letters patent, or any of them,
mentioned in this agreement, on the request of a majority of
the licensees, including the Licensee and the several additional
licensees hereinafter provided for, or such of them as may
at the time be licensees, nnd will thereafter diligently prose¬
cute any such suit or suits to final hearing and decision;
all expense connected with the institution and prosecution
of such suit or suits to be borne by the Licensor, who shall
also be entitled to receive and apply to its own use 'all
recoveries had therein for damages nnd profits.

ORIGINAL PETITION, EXHIBIT 3. 71

The Licensor and Licensee further mutually covenant
and agree that if in case any such suit is brought upon said
reissued Letters Patent Nos. 12037, 12192, or said Letters
Patent Nos. 58G953 or 722382, either of the claims of said
reissued Letters Patent No. 12192 or either of the first, sec¬
ond, or third claims of said reissued Letters Patent No.
12037, or any of the claims in issue in any such suit upon said
Letters Patent Nos. 580953 or 722382, is or are held invalid
by a court that last hears and decides such suit, or should
be held by such court not to be infringed, then, and in any
such case, the Licensee may at once terminate this agreement
and the license thereby granted, by giving notice of its elec¬
tion so to do to the Licensor.

The Licensor and Licensee further mutually covenant and
agree that the Licensor may, at its own expense (except as
hereinafter provided), during the continuance of this agree¬
ment, institute and prosecute suits against any of the several
additional licensees hereinafter provided for, for any breach
or violation on the part of any such licensee of the covenants
respecting prices at which positive motion pictures shall be
leased in the '‘lease territory aforesaid,” and also for viola¬
tion of any of the other terms, conditions, or stipulations
entered into by such licensee; that the Licensor shall at the
end of each year, counting from the day and year first above
written, render to the Licensee and the other licensees here¬
inafter provided for, or such of them as may at the. time he
licensees, a statement in writing showing in detail all legal
expenses incurred by it during such year in the prosecution
of such suit or suits; and that up to, but not exceeding, the
sum of twenty thousand dollars ($20,000) for any such year,
all such legal expenses, in so far as they may bo reasonable
and proper, shall be borne and paid by the Licensee nnd the
several additional licensees hereinafter provided for, pro rata
according to the number of thousand running , feet of new
subjects, offered for lease by each relatively to the total num¬
ber of thousand running feet of new subjects, on film of a
greater width than approximately one (1) inch, offered for
lease or sale by. all in the “territory aforesaid,” during the
year preceding the rendition of such statement, nny legal
65498-12 - 10

ORIGINAL PETITION, MX III HIT 3.

expenses in excess of said twenty thousand dollars (§20,000)
during any such year to be borne and paid by the Licensor
unless the Licensor and the Licensee and the several addi¬
tional licensees hereinafter provided for should hereafter
mutually agree otherwise.

20. It is mutually covenanted and agreed by and between
the Licensor and Licensee that the Licensor may grant other
licenses under said reissued Letters Patent Nos. 12037 and
12192 and said Letters Patent Nos. 029063 and 707934, so
far as the use of the inventions thereof in cameras is con¬
cerned, said licenses to be in writing and not to exceed nine
in number, seven to be to the persons and corporations men¬
tioned in paragraph c as having license agreements with the
Edison Company, one to the Edison Company, and one to
George Kleine, of Chicago, Illinois (except by a majority vote
of the Licensee and the nine other licensees, or such of them
as may at the time be licensees, on the basis of one vote for
each thousand running feet of new subjects, on film of a
greater width than approximately one (1) inch, offered for
lease or sale in the “territory aforesaid” by bucIi licensees
during the year preceding the taking of such vote), and not
to he granted or continued upon terms, conditions, or stipula¬
tions which are in any respect more favorable to the licensees
named therein than those set forth in this agreement (except
to the Edison Company, and it shall only be more fnvornble
to it in the matter of the payment of royalties to the Licensor),
and in the case of the license to George Kleine it shall be so
restricted ns to prohibit said Kleine from manufacturing neg¬
ative motion pictures in “the territory aforesaid,” and from
manufacturing from imported negative motion pictures posi¬
tive motion pictures, and importing positive motion pictures
in all more than three thousand "running feet of new sub¬
jects” per week: Provided, however, That if anv of such addi¬
tional nine licenses should be terminated during the contin¬
uance of this agreement, then nnd in each such case the
Licensor may grant a license in writing to some other motion-
picture manufacturer, hut not on terms, conditions, or stipu¬
lations which nre more favorable ns to such new licensee than
those set forth in this agreement.

ORIGINAL PETITION, EXHIBIT 3. 73

It is further mutually covenanted and agreed by and
between the Licensor and the Licensee that the Licensor
will, during the continuance of this agreement, license such
a number of persons, firms, or corporations under said
Letters Patent Nos. 5781S5, 5S0749, 586953, 588916, 673329,
673992, 707934, 7723S2, 744251, 770937, 771280, 785205,
and 785237, to make and sell exhibiting or projecting ma¬
chines containing the inventions described and claimed in
the same, capable of exhibiting or projecting motion pictures
on film of a width greater than approximately one (1) inch,
and also such machines not capable of exhibiting or project¬
ing motion pictures on film of a greater width than approx¬
imately one (1) inch, ns will he able to supply the demand
for the same; and that it shall not, and it hereby covenants
and agrees that it will not, during the continuance of this
agreement, license any person, firm, or corporation under said
letters patent dr any of them to make or sell any sncli
exhibiting or projecting machine containing any of the
inventions described and claimed in said letters patent, and
capable of exhibiting or projecting motion pictures on film
of a width greater than approximately one (1) inch, except
upon the conditions and restrictions that the sale and pur¬
chase of such machine gives only the right to use it solely
for exhibiting or projecting motion pictures containing the
inventions of said reissued Letters Patent No. 12192 leased
by a licensee of the Licensor, while it owns or controls the
letters patent under which such machine is licensed and
upon other terms to be fixed by the Licensor while in use,
and while the letters' patent under which it is licensed are
owned or controlled by' the Licensor (which other terms shall
only be the payment of a royalty or rental to the Licensor
while' in use, as hereinbefore provided for), nnd that there
shall be attached to each such machine, in a conspicuous
place, a plate, which is not to be removed therefrom; showing
plainly not only the dates of the letters patent under wliich
it is licensed, but also the aforesaid ’conditions' or' restriction’s.

The Licensor further covenants and agrees that it will
not charge any such person, firm, or corporation manu¬
facturing and selling any such machine capable of exhibit-

1 4 ORIGINAL PETITION, EXHIBIT 3.

ing or projecting motion pictures on a film of a width greater
than approximately one (X) inch, more than five dollars
(?5) as a license fee for the sale of each such exhibiting
or projecting machine sold by any such person, firm, or
. corporation.

The Licensor further covenants and agrees that it will not
license any person, firm, or corporation to make or sell
any exhibiting or projecting machine containing any of the
inventions described and claimed in the aforesaid letters
patent which is not capable of exhibiting or projecting
motion pictures on film of a width greater than approxb
inately one (1) inch, except upon the conditions and restric¬
tions that such machine bo used solely for exhibiting or
projecting motion pictures on film not wider than approxi¬
mately one (1) inch, in places where no admission fee is
charged, and that there shall be attached to each such
machine in a conspicuous place, a plate, which is not to be
removed therefrom, showing plainly, not Duly the dates .of
the letters patent under which it is licensed, but also the
aforesaid conditions or restrictions, and that the Licensor
will not charge to any person, firm, or corporation making
or selling any such machine a license fee of more than 5 per
cent of the net retail selling price of each such machine.

The Licensor further covenants and agrees that it will grant
a license to the Licensee, upon its request, to manufacture
and sell exhibiting or projecting machines under the letters
patent, and upon the condition as to the payment of the
license fees or royalties and the other conditions and restric-
tions, as provided for in this paragraph, and will also grant
similar licenses upon the same conditions as to the payment
of the license fees or royalties and the other conditions and
restrictions, to such of the additional licensees hereinbefore
provided for who may request the same, except that the said
American Mu toscope & Biograph Company is not to pav any
such license fees or royalties ; and will also grant a license to the
Licensee and any such additional licensees who mav request

imder™ ^ °r Projecting machines

under any other letters patent and containing the inventions
described and claimed therein that the Licensor may here-

ORIGINAL PETITION, EXHIBIT 3.

after acquire or control, upon the payment of additional
license fees or royalties to be fixed by the Licensor, and sub¬
ject to similar conditions and restrictions and the placing
upon the machines of plates containing such conditions and
restrictions as are provided for in this paragraph respecting
exhibiting or projecting machines made and sold under the
letters patent now owned by the Licensor mentioned in this
paragraph, the royalty or license fee, and all other conditions
and restrictions of such last-named licenses to be the same
for the Licensee and such other licensees.

It is mutually covenanted and agreed, however, by and
between the Licensor and Licensee that the Licensor shall
linve the right to grant, and that it will grant, licenses to
persons, firms, and corporations upon their request (includ¬
ing the Licensee) to manufacture and sell exhibiting or pro¬
jecting machines containing the inventions described and
claimed in the aforesaid letters patent now owned by the
Licensor, capable of exhibiting or projecting, by reflected
light, animated pictures on film of any width, but not
capable of exhibiting or projecting the same by transmitted
light, upon the payment of a royalty or license fee hot to
exceed 5 per cent of the net retail selling price of each such
machine, and upon the condition that they be used only in
places where no admission fee is charged, which condition
shall appear on a plate to be attached to each such machine;
and also that it will grant licenses to such persons, firms, and
corporations to manufacture and sell such exhibiting or pro¬
jecting machines containing the inventions described and
claimed in any letters patent that the Licensor' may here¬
after own or control, subject to similar conditions or restric- .
tions and' upon the payment of additional license fees or
royalties to be fixed by the Licensor; the royalty or license
fee, and all the conditions and restrictions of all such licenses,
to be the same for the Licensee and such other licensees,

20n. It is further mutually covenanted and agreed by
and between the Licensor and Licensee that in case' the
Licensor should be notified by the Licensee or it should
otherwise come to its knowledge that any sucli additional

76 ORIGINAL PETITION, EXHIBIT 3.

Licensee has knowingly or through gross neglect or careless¬
ness broken, violated, or failed to perforin any of the terms,
conditions, or stipulations of the license granted by the
Licensor, resulting in substantial injury to the Licensor, or
the Licensee or the additional Licensees aforesaid, the Licen¬
sor will promptly notify such Licensee in writing of such
breach, violation, or nonperformance, and if such Licensee
should, for a period of forty (40) days after such notice,
persist in or fail to correct, repair, or remedy the same, the
Licensor shall at once terminate the license to such Licensee;
and that in case any such Licensee should be guilty of a
second grossly neglectful, careless, or knowing breach,
violation, or nonperformance of such terms, conditions, or
stipulations, resulting in substantial injury to the Licensor,
or the Licensee or the additional Licensees aforesaid, then,
and in such case, the Licensor shall terminate the license
to such Licensee by giving the latter thirty (30) days’ notice
in writing of its intention so to do.

206. The Licensor and Licensee further mutually covenant
and agree that by the expression “motion pictures,” as
used in the foregoing agreement, is meant transparent or
translucent tape-like film having photographs thereon of
objects in motion.

21. It is further mutually covenanted and agreed by and
between the Licensor and Licensee that unless sooner
terminated, as hereinbefore or hereinafter •provided, this
agreement and the license granted thereby shall take effect
January 1, 1909, and shall continue until June 20, 1910, but
that the Licensee may renew this agreement and license
thereafter from year to year upon the same terms, condi¬
tions, and stipulations as herein provided, by giving notice
to the Licensor on or before April 20 of each year, beginning
with the year 1910, of the Licensee’s election to so renew
this agreement and license, and upon the giving of each
such notice this agreement and the license thereby granted
shall be considered and treated by the Licensor and Licensee
as renewed for a period of one year, beginning June 20 of
the year following such notice, except that the last renewal

OniGINAL PETITION, EXHIBIT 3. 77

period shall be for the period from June 20, 1914, to August
2G, 1919, the date of expiration of the Letters Patent No.
707934.

It is further mutually covenanted and agreed by and
between the Licensor and Licensee that if, during said original
term or during any such renewal period, either party should,

■ knowingly or through gross neglect or carelessness, be guilty

of a breach, violation, or nonperformance of its covenants,
$, conditions, and stipulations, resulting in substantial, injury

:J to the other party, and should, for the period of forty (40)

; flays after notice thereof from the other party, persist therein

%. or fail to correct, repair, or remedy the same, then and in such

3| case the party aggrieved may terminate this agreement by

| giving notice in writing to the guilty party of its intention

:;'i. so t0 do. It is, however, mutually covenanted and agreed

I by and between the Licensor and Licensee, that if the guilty

H party should correct, repair, or remedy such breach, violation,

: or nonperformance of its covenants, conditions, and stipula-

| tions within the said period of forty (40) days after such

§ notice, and should thereafter knowingly or through gross

h neglect or carelessness be guilty of a second breach, violation,

<1 or nonperformance of its covenants, conditions, and stipula¬

tions, resulting in substantial injury to the other party, then
and in such case, the party aggrieved may terminate this
J agreement by giving thirty (30) days’ notice in writing to the

guilty party of its intention so to do. Such termination of
I the agreement, however, shall not prejudice cither party

\ hereto in the recovery of damages because of any such breach,

| violation, or nonperformance by the other party hereto,

f 22. All notices provided for in this agreement shall be in

writing and shall be given by delivering the same to the
Licensor or Licensee, ns the case may be, or to an officer of
the Licensor or Licensee, ns the case may be, or by depositing
such notice, postage prepaid, in any post office of the United
States, in a. sealed envelope directed to the Licensor or the
Licensee, as the case may be, at its last known post-office
address, to be forwarded by registered mail.

23. It is mutually covenanted and agreed by and between
the Licensor and Licensee that after notice of the termination

78 ORIGINAL PETITION, EXHIBIT 3.

of this agreement and the license granted thereby by either
party, as provided for in paragraphs 19 and 21 of this agree¬
ment, and after the same have been terminated, no matter
wlmt the cause or manner of termination may be, neither
this license agreement, nor the fact that the Licensee has
entered into or acted under it, shall be used in any manner,
directly or indirectly, by or for the Licensor, its successors,
assigns, or legal representatives, or by or for others with its
or their consent or permission, against the Licensee, or the
Licensee’s successors or legal representatives, in any litiga¬
tion, controversy, or proceeding involving the Licensee or
them or any other persons, Arms, or corporations, or in any
other way, it being understood and agreed that upon such
termination the positions and rights of the Licensor and
Licensee shall he the same as if this agreement had not been
made; provided, however, that the rights of neither party
shall be prejudiced by such termination in the recovery of
damages for any breach or other violation of this agreement
by the other occurring prior to such termination.

In witness whereof the parties hereto have caused this
agreement to be executed by their officers duly authorized
to perform these acts, the day and year first above'written.

[seal.] Motion Picture Patent Company,

By Prank L. Dyer, President.

— Attest:

GrEonaE P. Scull, Secretary.

[seal.] American Mutoscope and Biograph Company,
By J. J. Kennedy, President.

Attest :

W. H. BRUENNEn, Secretary.

Exhibit 4.

Form of License Agreement Between motion
Picture Patents Company and the Rental
Exchanges.

EXCHANGE LICENSE AGREEMENT.

Whereas the Motion Picture Patents Company, of New
York City (hereinafter referred to as the “Licensor”) is the
owner of all the right, title, and interest in and to reissued
Letters Patent No. 12192, dated January 12, 1904, granted to
Thomas A. Edison for kinetoscopic film, and also Letters
Patent Nos. 578185, 680749, 58G953, 588916, G73329, 673992,
707934, 722382, 744251, 770037, 771280, 785205, and 785237,
for inventions relating to motion picture projecting machines;
and

Whereas the Licensor has licensed the American Muto¬
scope and Biograph Company, of New York City; the Edison
Manufacturing Company, of Orange, New Jersey; the Essa-
nay Company, of Chicago; the Kalem Company, of New York
City; George Kleine, of Chicago; Lubin Manufacturing Com¬
pany, of Philadelphia; Pathe Preres, of New York City; the
Selig Polyscope Company, of Chicago; and the Vitagraph
Company of America, of New York City (hereinafter referred
to as "Licensed Manufacturers or Importers”), to manufac¬
ture or import motion pictures under said reissued letters
patent and to lease licensed motion pictures (hereinafter
referred to as “Licensed Motion Pictures”) for use on pro¬
jecting machines licensed by the Licensor; and

Whereas the undersigned (hereinafter referred ' to as the
“Licensee”), desires to obtain a license under said reissued
Letters Patent No. 12192, to lease from the Licensed Manu¬
facturers and Importers licensed motion pictures and to sublet
the said licensed motion pictures for use on projecting
machines licensed by the Licensor;

55498-12 —11 79

— - • - 1

ORIGINAL PETITION, EXHIBIT 4.

Now, therefore, the parties hereto, in consideration of
the covenants herein, have agreed as follows:

(1) The Licensor hereby grants to the Licensee for the
term and subject to the conditions expressed in the "Con¬
ditions of license” hereinafter set forth, the license, under
the said reissued Letters Patent No. 12192, to lease licensed
motion pictures from the Licensed Manufacturers and
Importers and to sublease said license motion pictures
for use only on projecting machines licensed by the Licensor
under letters patent owned by it.

(2) The Licensee covenants and agrees to conform with
and strictly adhere to and be bound by all of the “Condi¬
tions of license,” hereinafter set forth, and to and by any and'
all future changes in or additions thereto, and further agrees
not to do or suffer any of the acts or things thereby pro¬
hibited, and that the Licensor may place and publish the
Licensee’s name in its removal or suspended list in the event
of the termination of this agreement by the Licensor, or in
case of any violation thereof, and may direct the Licensed
Manufacturers and Importers not to lense licensed motion
pictures to the Licensee, the Licensee hereby expressly
agreeing that such Licensed Manufacturers and Importers
shall have the right to cease such leasing when so directed
by the Licensor; and the Licensee further ngrecs that the
signing of this agreement constitutes a cancellation of any or
all agreements for the sale of licensed motion pictures made
prior' to this agreement by and between the Licensee and
any or all licensed manufacturers or importers, except as
to any clause in said agreements relating to the return of
motion-picture film to the several licensed manufacturers
or importers. It is further understood nnd agreed by. the
Licensee that the license hereby granted is a personal one
and not transferable or assignable, and the Licensee hereby
recognises and acknowledges the validity of the said reissued
Letters Patent No. 12192.

; CONDITIONS OF LIOENSE.

1. Prom the date of this agreement the Licensee shall not
buy, lease, rent, or otherwise obtain any motion pictures
other than licensed motion pictures and shall dispose of any
motion pictures only by the subleasing thereof under the
conditions hereinafter set forth.

i 2. The ownership of each licensed motion picture leased

under this agreement shall remain in the Licensed Manu-
Vj facturcr or Importer from whom it may have been leased,

■;'[ the Licensee, by the payment of the leasing price acquiring

only the license to sublet such motion picture subject to the
Srf conditions of this agreement. Such license for any motion

i S picture shall terminate upon the breach of this agreement

<1 in regard thereto, and the Licensed Manufacturer or Importer

■;?* from whom it may have been leased shall have the right to

:.i immediate possession of such motion picture, without

•%j liability for any leasing price or other sum which the Licensee

or the person in whose possession said motion picture is found
Op may have paid therefor.

3. The Licensee shall not sell nor exhibit licensed motion
pictures obtained from any Licensed Manufacturer or
- !- Importer, either in the United States or elsewhere, but shall

;; only sublet such licensed motion pictures and only for use
in the United States and its Territories and only to exhibitors
who shall exclusively exhibit licensed motion pictures, but
J in no case shall the exhibitor be permitted to sell or sublet

■ or otherwise dispose of said licensed motion pictures,

j 4. The lensing price to be pnid by the Licensee to the

Vi Licensed Manufacturers or Importers, or the terms of pny-

£ ment for or shipment of licensed motion pictures, shall in no

case be less or more favorable to the Licensee than that
i;j defined in the leasing schedule embodied in this agreement,

or any other substitute leasing schedule, which may be
regularly adopted by the Licensor, and of which notice shnll
J be given to the Licensee hereafter.

(| 5. To permit the Licensee to take advantage of any

j standing order lensing price mentioned in such schedule,

I such standing order with any Licensed Manufacturer or

S2 ORIGINAL PETITION, EXHIBIT 4.

Importer sliall be for one or more prints of each and every |

subject regularly produced, and offered for lease by such :.j

manufacturer or importer as a standing order subject and
not advertised as special by such Licensed Manufacturer or :j

Importer; and shall remain in force for not less than fourteen vj

(14) consecutive days. Any standing order may be canceled fj

or reduced by the Licensee on fourteen (14) days’ notice. S;

Extra prints in addition to a standing order shall be furnished ! j

to the Licensee at the standing order leasing price. .»

G. The Licensee shall not sell, rent, or otherwise dispose of, ,!

either directly or indirectly, any licensed motion pictures j]

(however the same shall have been obtained) to any persons, >

firms or corporations or agents thereof, who may be engaged [

cither directly or indirectly in selling or renting motion ;

picture films. :

7. The Licensee shall not make or cause to he made, or i

permit others to make, reproductions or so-called “dupes” j

of any licensed motion pictures, nor sell, rent, loan, or other- ;

wise dispose of or deal in any reproductions or “dupes” of

any motion pictures.

8. The Licensee shall not deliberately remove the trade¬
mark or trade name or title from any licensed motion
picture, nor permit others to do so, but in case any title is
made by the Licensee, the manufacturer’s name is to bo

placed thereon, provided that in making any title by the j

Licensee the manufacturer’s trade-mark shall not be repro¬
duced.

0. The Licensee shall return to each licensed manufacturer
or importer (without receiving any payment therefor, except
that the said Licensed Manufacturer or Importer shall pay the
transportation charges incident to the return of the same) on
the first day of every month commencing seven months from
the first day of the month on which this agreement is exe¬
cuted, an equivalent amount of positive motion-picture film
in running feet (not purchased or leased over twelve months
before) and of the make of the said Licensed Manufacturer
or Importer, equal to the amount of licensed motion pictures
that was so leased during the seventh month preceding the day
of each such return, with the exception, however, that where

ORIGINAL PETITION, EXHIBIT 4. 83

any such motion pictures are destroyed or lost in trans¬
portation or otherwise, and satisfactory proof is furnished
within fourteen (14) days after such destruction or loss,
to the Licensed Manufacturer or Importer from whom such
motion picture was leased, the Licensed Manufacturer or
Importer shall deduct the amount so destroyed or lost from
the amount to be returned.

10. The Licensee shall not sell, rent, sublet, loan, or other¬
wise dispose of any licensed motion pictures (however the
same may have been obtained) to any person, firm, or cor¬
poration in the exhibition business who may have violated
any of the terms or conditions imposed by the Licensor
through any of its licensees and of which violation the present
Licensee may have had notice.

11. The Licensee shall not sublease licensed motion pic¬
tures to any exhibitor unless a contract with said exhibitor
(satisfactory in form to the Licensor) is first exacted, under
which the exhibitor agrees to conform to all the conditions
and stipulations of the present agreement applicable to the
exhibitor; and in the case of an exhibitor who may operate
more than a single place of exhibition, a similar contract
shall be exacted in connection with. each place so operated,
and supplied with licensed motion pictures by the Licensee.

12. After February 1, 1909, the Licensee shall not sub¬
lease any licensed motion pictures to any exhibitor unless
each motion picture projecting machine on which the
licensed motion pictures are to be used by such exhibitor is
regularly licensed by the Motion Picture Patents Company,
and the license fees therefor have been paid; and the
Licensee shall, before supplying such exhibitor with licensed
motion pictures, mail to the Motion Picture Patents Com¬
pany, at its office in New York City, a notice, giving the
name of the exhibitor, the name and location of the place
of exhibition (and, if requested to do so by the Licensor, its
seating capacity, hours of exhibition, and price of admission,
and the number and make of the licensed projecting machine
or machines), together with the date of the commencement of
the subleasing, all in a form approved by the Licensor. The
Licensee, when properly notified by the Licensor that the

84 ORIGINAL PETITION, EXHIBIT 4.

license fees of any exhibitor for any projecting machine have
not been paid, and that the license for such projecting
machine is terminated, shall immediately cease to supply
such exhibitor with licensed motion pictures.

13. The Licensee agrees to order during each month
while this agreement is in force, for shipment directly to
the place of business of the Licensee in the city for which
this agreement is signed, licensed motion pictures, the net
leasing price for which shall amount to at least §2,500.

14. The Licensee shall, on each Monday during the con¬
tinuance of this agreement, make or mail payment to each
Licensed Manufacturer and Importer for all invoices for
licensed motion pictures which have been received by the
Licensee during the preceding week.

15. This agreement shall extend only to the place of busi¬
ness for the subleasing of motion pictures maintained by
the Licensee in the city for which this agreement is signed,
and the Licensee agrees not to establish or maintain a place
of business for the subleasing of motion pictures, or from
which motion pictures are delivered to exhibitors, in any
other city, unless an agreement for such other city, similar
to the present agreement, is first entered into by and between
the Licensee and the Licensor.

1G. The Licensor agrees that before licensing any person,
firm, or corporation in the United States (not including
its insular Jerritorinl possessions and Alaska) to lease licensed
motion pictures from Licensed Manufacturers and Impor¬
ters and to sublease such motion pictures it will exact from
each such Licensee an agreement similar in terms to the
present agreement, in order that all Licensees who may do
business with the Licensed Manufacturers- and Importers
will be plnced in a position of exact equality.

10. It is understood and specifically covenanted by the
Licensee that the Licensor may terminate this agreement
on fourteen (14) days’ written notice to the Licensee of its
intention so to do, and that if the Licensee shall fail ' to
faithfully keep and perform the foregoing terms and’ condi¬
tions of lease, or any of them, or shall fail to pay the leasing

ORIGINAL PETITION, EXHIBIT 4. 85

v price for any motion pictures supplied by any Licensed

Manufacturer or Importer when due and payable, according
to the terms of this agreement, the Licensor shall have the
right to place the Licensee’s name on an appropriate sus¬
pended list, which the Licensor may publish and distribute
to its other licensees and to exhibitors and to the Licensed
■4 Manufacturers and Importers and to direct the Licensed

Manufacturers and Importers not to lease licensed motion
•; pictures to the Licensee, and the exercise of either or both

of these rights by the Licensor shall not be construed ns a
>i termination of this license, and the Licensor shall also have

"i the right in such case, upon appropriate notice to the

;•$ Licensee, to immediately terminate the present license, if the

Licensor shall so elect, without prejudice to the Licensor’s
J-j right to sue for and recover any damages which may have

;s-f been suffered by such breach or noncompliance with the

terms and conditions hereof by the Licensee, such breach or
;|| noncompliance constituting an infringement of said reissued

ylj letters patent. It is further agreed by the Licensee that

S if this agreement is terminated by tlie'Licensor for nny breach

°f any condition hereof, the right to possession of all licensed
motion pictures shall revert, twenty days after notice of
i such termination, to the respective • Licensed Manufacturers

V and Importers from whom they were obtained and shall bo

sj returned to such Licensed Manufacturers or Importers at

;r once after the expiration of that period.

"i 20. It is understood that the terms and conditions of this

'•! license may be changed at the option of the Licensor upon

fourteen (14) days’ written notice to the Licensee, but no
y? such change shall be effective and binding unless duly ratified

' I by an officer of the Licensor.

;; Leasino rmers of Licensed Positive Motion Pictures.

Films leased between two and four months after release date.
Films leased between four and six months nftor release date. .
Films leased over six monthB after release date .

80 ORIGINAL PETITION, EXHIBIT 4.

A rebate of 10 per cent will be allowed on all leases of
licensed motion pictures, except at the 7-cent and 6-ccnt
prices, which are net; said rebates to bo due and payable
between the 1st and 15tli days of each of the months of
March, May, July, September, November, and January on
all films' leased during the two months preceding each said
period, provided all the terms and conditions of this license
agreement have been faithfully observed.

TERMS.

All shipments are made f. o. b. lessor’s office at lessee’s
risk. |

All motion-picture films are to be shipped to lessee’s office
only.

The lengths at which motion-picture films are listed and
leased are only approximate.

Motion Picture Patents Company,

By - , President.

Licensee’s signature, - .

Place of business for which this license is granted:

Street and No. - -

City - , State - .

;; Exhibit 5.

License Agreement Under the Exhibiting Ma¬
chine Patents, Between Motion Picture
Patents Company and Armat Moving
Picture Company.

5. (a) This agreement made this 7th day of January, 1909,

•V by and between the Motion Picture Patents Company, a cor-
poration organized and existing under the laws of the State
3 of New Jersey, and having an office at Jersey City, in said
$ State, party of the first part (hereinafter referred to as the

iSj “Licensor”), and Armat Moving Picture Company, a corpo-

ration organized and existing under the laws of the State of
West Virginia, and having an office at Washington, D. C.,
■4 party of the second part (hereinafter referred to as the
M “Licensee”) ;

(6) Whereas the Licensor represents that it is the owner
Si of the entire right, title, and interest in and to letters patent
:f of the United States :

No. 678185, dated March 2, 1897, for vitascope,
granted to Thomas Armat;

| No. 580749, dated April 13, 1897, for vitascope,

S' granted to Thomas Armat;

No. 680953, dated July 20, 1897, for phantoscope,
:1 granted to Charles P. Jenkins and Thomas Armat;

No. 588916, dated August 24, 1897, for kinetoscope,

! granted to Charles M. Campbell as the assignee of

Willard G-. Steward and Ellis P. Prost; .

No. 673329, dated April 30, 1901, for kinetoscope,
granted to the American Vitagraph Company , as
the assignee of Albert E. Smith ;

No. 673992, dated May 14, 1901, for vitascope, granted
to Thomas Armat;

No. 707934, dated August 26, 1902, for projecting
kinetoscope, granted to E. & H. T. Anthony & Co.,
as assignees of Woodville Latham ; ■■■■.• , t

65498 — 12- — 12 87

S8 ORIGINAL PETITION, EXHIBIT 5.

No. 722382, dated Starcli 10, 1903, for animated pic¬
ture apparatus, granted to American Mutoscope &
Biograpli Company as the assignee of John A.

No. 744251, dated November 17, 1903, for kineto-
scope, granted to Albert E. Smith;

No. 770937, dated September 27, 1904, for kineto-
scope, granted the Vitagraph Company of America

as the assignee of Albert E. Smith;

No. 771280, dated October 4, 1904, for winding reel,
granted Albert E. Smith ;

No. 785205, dated March 21, 1905, for flame-shield for
kinetoscopes, granted the Vitagraph Company of
America as the assignee of William Ellwood; and

No. 785237, dated March 21, 1905, for film-holder for
kinetoscopes, granted the Vitagraph Company of
America as the nssignee of Albert E. Smith ;
all of which said letters patent relate to improvements on
the motion-picture art, and that there are no outstanding
licenses, shop rights, or other rights under said letters
patent, or either of them, except a license for parlor kineto-
sco'pes, granted the Karmata Company, of Washington,
D. C., under Letters Patent Nos. 578185, 580749, 58G953,
and 673992, and certain alleged licenses under U. S. Letters
Patent No. 586953, which are in dispute, claimed to be
owned by the Edison Company* and the American Graplio-
phone Company, of Washington, D. O., and S. Lubin, of
Philadelphia, Pennsylvania; and excepting a license granted
by the American Mutoscope & Biograpli Company to the
firm of Marvin and Cnsler to manufacture and sell cameras
and exhibiting or projecting machines under letters patent
owned by it (some of which are hereinbefore referred to) for
use in foreign countries only and excepting Certain licenses
granted by the Licensee to tlic American Mutoscope & Bio¬
graph Company under Letters Patent Nos. 578185, 580749,
580953; 588919, and 079902, and by the American Mnto-
scopc 'ft Biograpli Company to the Licensee under patents
Nos. 707934 and 722382, which licenses are, however, by
agreement between said parties, suspended and are not to

OltIQINAL PETITION, EXHIBIT 6. 89

■1 be acted upon until the Licensor becomes bankrupt, ceases

.■! doing business or shall be dissolved voluntarily or other¬

wise, or its charter shall be repealed ; and

(c) Whereas the Licensor represents further that it is the
^ owner of the entire right, title, and interest in and to reissued

A Letters Patent of the United States Numbered 12192, dated

Si January 12, 1904, the original letters patent of which were

4 numbered 589108, and dated August 31, 1S97, nnd that it

vl* has granted licenses under the said reissued letters patent

V#' only to the following-named persons, firms, or corporations :
t§| American Mutoscope & Biograph Company of New

York City;

|3J Edison Manufacturing Company of Orange, N. J.;

Essanay Company of Chicago, Illinois;

I Kalem Company of New York City;

George Kleine of Chicago, Illinois;

Lubin Manufacturing Company of Philadelphia, Pa.;
Patlie Freres of New York City;

Selig Polyscope Company of Chicago, Illinois;

The Vitagraph Company of America of New York
City;

and that all of the said persons, firms, or corporations have
covenanted and agreed to lease only and not sell in the
IP United States, its Territories and possessions except its insular
J|§| possessions and Alaska (hereinafter referred to as the
“lease territory aforesaid”), motion picture films manu-
factored or imported by them, of a width greater than
sUf approximately one inch (1”), nnd under the condition and
restriction that the snid films shall be used only on exhibi¬
tion or projecting machines licensed by the Licensor undev
United States letters patent owned by the Licensor; and
(d) Whereas the Licensee is engaged in . the manufacture
and sale of motion picture exhibiting and projecting ma-
®j| chines, and relying upon the representation of the Licensor

SM and induced thereby, desires to obtain from the Licensor a

eft license under the said United States Letters Patent;

ti§| ( e ) Now, therefore, the parties hereto, for and in . con-

s||| siderntion of the sum of one dollar to each in hand paid by

ORIGINAL PETITION, EXHIBIT 5.

the other, and for other good and valuable considerations,
from each to the other moving, receipt of all of which is
hereby acknowledged, have agreed as follows :

(1) The Licensor hereby grants to the Licensee for the
term and subject to the covenants, conditions, and stipula¬
tions hereinafter expressed, the right and license for the
United States, its territories and possessions, to manufacture
and sell, motion picture exhibiting or projecting machines
embodying one or more of the inventions described and
claimed in the said United States Letters Patent Nos. 578185,
580749, 580953, 58891G, 073329, 073992, 707934, 7223S2,
744251, 770937, 771280, 785205, and 785237. The license
hereby granted is personal to the Licensee, and in the event
of the permanent discontinuance or retirement from business
of the Licensee for a period of six consecutive months, the
license hereby granted shall he immediately terminated.

' (2) The Licensor, for itself, its successors, assigns, and
legal representatives, hereby releases, acquits, and dis¬
charges the Licensee from any and all claims, demands, and
liability for profits and damages because of any infringement
by the Licensee of one or more of the said United States
Letters Patent Nos. 578185, 580749, 580953, 588916, 673329,
673992, 707934, 722382, 744251, 770937, 771280, 785205, and
785237, or use by the Licensee of the inventions covered
thereby.

(3) The Licensee hereby recognizes and admits the validity
of each and all of the said United States Letters Patent Nos.
' 578185, 580749, 580953, 588916, 673329, 073992, 707934,

722382, 744251, 770937, 771280, 785205, and 785237, and
the Licensee agrees hot to contest or question the same
during the continuance of this agreement.

(4) The Licensee covenants and agrees that on all motion
picture exhibiting or projecting machines containing one or
more of the inventions described and claimed in the said
United States Letters Patent Nos. 673329, 744251, 770937j
771280, 785205, and 785237, made in the United States, its
Territories and possessions, by the Licensee, and sold after
the license hereby granted shall take effect and during the

ORIGINAL PETITION, EXHIBIT 5. 91

continuance of this agreement, the Licensee will pay royalties
as follows:

On each such machine capable of exhibiting or projecting
by transmitted light, motion pictures on film of a width
greater than approximately one inch (1"), a royalty of one
dollar (?1).

On each such machine not capable of exhibiting or pro¬
jecting by transmitted light, motion pictures on film of a
width greater than approximately one inch (1"), a royalty
of three-fifths (3-5) of one (1) per cent of the net retail
selling price of such machines.

On each such machine capable of exhibiting or projecting
by reflected light motion pictures on film of any width, hut
but not capable of exhibiting or projecting the same by
transmitted light, a royalty of three-fifths (3-5) of one (1) per
cent of the net retail selling price of such machine.

It is understood and agreed by and between the Licensor
and the Licensee that the expression “motion picture exhib¬
iting or projecting machine,” as used hereinbefore or here¬
inafter, includes motion-picture mechanisms or “heads” for
such exhibiting or projecting machines, hut not any repair
parts or portions of such motion-picture mechanisms or
“heads.”

The Licensee further covenants and agrees that the
Licensee will, within fifteen (15) days after the last days of
the months of November, February, May, and August in
each year, after this agreement takes effect and during its
continuance, submit a statement in writing signed by the
proper officer of the Licensee, and sworn to if requested by
the Licensor, showing the number of exhibiting or projecting
machines of each of the classes provided for in this para¬
graph, embodying one or more of the inventions described
and claimed in the said United States Letters Patent Nos.
073329, 744251, 770937, 771.280, 785205, and 785237, sold
hy the Licensee during the three months ending with the
last days of the said months, and at the same time pay the
royalties due- thereon. The first such statement and pay¬
ment, however, shall he only for the period between Februaiy
1, 1909, and February 28, 1909. The Licensee further agrees

I s

92 ORIGINAL PETITION, EXHIBIT 5.

to keep accurate books of account and to permit the Licensor
to determine through Messrs. Price, Waterhouse & Com¬
pany, or any other reputable chartered accountants to be
agreed upon by the parties hereto, the number of such
exhibiting or projecting machines sold by the Licensee while
this agreement is in effect, if the Licensor should so desire.

(5) The Licensee further covenants and agrees that each
and every motion picture exhibiting or projecting machine
capable of exhibiting or projecting by transmitted light,
motion pictures on a film of a width greater than approxi¬
mately one inch (1"), and embodying one or more of the
inventions described and claimed in the said United States
Letters Patent Nos. 578X85, 580749, 586953, 588916, 673329,
673992, 707934, 722382, 744251, 770937, 771280, 785205’
and 785237 made in the United States, its territories or pos¬
sessions by the Licensee, shall be sold by the Licensee,
except when sold for export, under the restriction and
condition that such exhibiting or projecting machines,
shall be used solely for exhibiting or projecting motion
pictures containing the invention of reissued Letters Patent
No. 12192, leased by a Licensee of the Licensor while it
owns said patents, and upon other terms to be fixed by
the Licensor and complied with by the user while the said
machine is in use and while the Licensor owns snid patents
(which other terms shall only be the payment of a royalty
or rental to the Licensor while in use). The Licensor
further covenants and agrees that the Licensee will attach
in a conspicuous place to each and every such exhibiting or
projecting machine of the Licensee’s manufacture, sold by
the Licensee, except for export, after the date hereof, a
plate showing plainly not only the dates of the letters
patent under which the said machine is licensed, but also
the following words and figures :

Serial No :

Patented. No.

The sale and purchase of this machine gives only the
right to use it solely with moving pictures containing the
invention of reissued patent No. 12192, leased by a licensee

ORIGINAL PETITION, EXHIBIT 5. 93

of the Motion Picture Patents Company, the owner of the
above patents and reissued patent, while it owns said pat¬
ents, and upon other terms to be fixed by the Motion Pic¬
ture Patents Company und complied with by the user
while it is in use and while the Motion Picture Patents
Company owns said patents. The removal or defacement;
of this plate terminates the right to use this machine.

(6) The Licensee further covenants and agrees that each
and every motion picture exhibiting or projecting machine
not capable of exhibiting or projecting by transmitted light,'
motion pictures on a film of a width greater than approxi¬
mately one inch (1"), or capable of exhibiting or projecting
motion pictures on film of any width, but only with reflected
light, and embodying one or more of the inventions described
and claimed in the said Letters Patent Nos. 578185, 580749,
586953, 588916, 673329, 673992, 707934, 7223S2, 744251,
770937, 771280, 785205, and 785237; and made in the United
States, its Territories and possessions by the Licensee, shall
be sold by the Licensee, except when sold for export, under the
restrictions and condition that the said exhibiting or project¬
ing machine shall be used in exhibiting or projecting motion
pictures only in places to which no admission fee is charged.
The Licensee further covenants and agrees that the Licensee
will attach in a conspicuous place to each and every such
exhibiting or projecting machine of the Licensee’s manufac¬
ture, sold by the Licensee, except for export, after the date
hereof, a plate showing plainly not only the dates of the Let¬
ters Patent under which the said machine is licensed, but
also the following words and figures :

Patented No.

The sale and purchase of this machine gives only the right
to use it so long as this plate is not removed or defaced and in
places to which no admission fee is charged.

(7) The Licensee further covenants and agrees that to
each and every motion-picture exhibiting or projecting
machine of any kind, embodying one or more of the inven¬
tions described and claimed in the said United States Letters

94 ORIGINAL PETITION, EXHIBIT 5.

OIIIGINAL PETITION, EXHIBIT 5. 95

Patent Nos. 57S1S5, 580749, 5SG953, 58S91G, 073329,

073992, 707934, 7223S2, 744251, 770937, 771280, 785205,
and 785237, and made in tlie United States, its Territories
and possessions by the Licensee, when sold bona fide for
export, there shall be attached a plate showing plainly not
only the dates of the letters patent under which the said
machine is licensed, but also the following words and
figures :

Patented No.

Not licensed for use in the United States, its Territories
and possessions (except its insular possessions and Alaska).

It is understood by and between the parties hereto that
by “export sales” is meant all sales for delivery outside of
the “lease territory aforesaid,” when the machine, ad¬
dressed to the purchaser, agent, or consignee, is delivered
to the vessel or to a transportation company for transporta¬
tion outside of the said “lease territory aforesaid,” and not
otherwise.

(8) The Licensee further covenants and agrees that the
Licensee will not, during the continuance of this agreement,
make or sell repair parts for motion-picture exhibiting or
projecting machines which have been manufactured or
imported and sold by any other person, firm, or corporation,
who or which is licensed by the Licensor to manufacture or
import and sell motion-picture exhibiting or projecting
machines under any or all of the said United States Letters
Patent Nos. 578185, 580749, 580953, 58891G, 073329, 073992,
707934, 722382, 744251, 770937, 771280, 785205, and 785237,
when such repair parts constitute any part of any invention
described and claimed in the said United States letters
patent.

(9) The Licensee further covenants and ngrees that the
Licensee will not sell any exhibiting or projecting mncliine
which the Licensee is hereby licensed to manufacture at less
than the Licensee’s list price for such machine, except to
jobbers, and to other persons, firms, and corporations for the
purpose of resale, and that the Licensee will require such
jobbers and other persons, firms, and corporations to sell

such machines at not less than the Licensee’s list price for
such machine. Nothing in this paragraph shall prohibit,
however, the allowance of two per cent (2%) discount from
list price for ten days cash payments.

(10) The Licensee further covenants and agrees that the
Licensee will not sell, after May 1, 1909, during the continu¬
ance of this agreement, any exhibiting or projecting machine
which the Licensee is hereby licensed to manufacture, capable-
of exhibiting or projecting by transmitted light, motion
pictures on film of a width greater than approximately pne
inch (1"), at a less list price than one hundred and fifty
dollars (§150), which list price may include the machine
head, stercopticon attachment, film maga7.ine, lamp liopse,
arc lamp, rheostat, switch and switch box, and attaching
cords, except, however, that for the last five named items
may be substituted a gas burner and gas making outfit.
It is further understood and agreed that such complete
machines may be sold between February 1, 1909, and May 1,
1909, at a less list price than one hundred and fifty dollars
(§150), but only to persons, firms, or corporations not en¬
gaged in the business of renting motion picture films, and
not for use in any permanent or fixed place of exhibition.

(11) It is further mutually covenanted and agreed by and
between the Licensor and Licensee that the Licensor mpy
grant other licenses to manufacture or import and sell
motion picture exhibiting or projecting machines under any
or all of the said United States Letters Patent Nos. 578185,
580749, 580953, 588910, 073329, 073992, 707954, 722382,
744251, 770937, 771280, 785205, and 785237, said licenses
to be in writing, and not to be granted or continued under
terms, conditions, or stipulations which are in any respect
more favorable to the Licensees named therein than those
set forth in this agreement (except to the American Muto-
scope & Biograpli Company of New- York City, which is
pay no royalties on any exhibiting or projecting machines
embodying any or all of the inventions described and claimed
in the aforesaid Letters Patent Nos. 578185, 580749, -580953,
58891G, 073992, 707934, ■ and 722382, and to .the -Edison

65498-12 - 13

PETITION, EXHIBIT 5.

96 ORIGINAL PETITION, EXHIBIT 5.

ORIGINAL I

.Manufacturing Company, of Orange, New Jersey, and the
firm of Marvin and Casler, of Canastota, New York, neither
of which is to pay any royalties on any exhibiting or pro¬
jecting machines embodying any or all of the inventions
described and claimed in the aforesaid letters Patent Nos.
67SXS5, 580749, 5SG953, 588910, 073992, 707934, ai.d

-722382, when such exhibiting or projecting machines are sold
bona fide for export, the covenants and conditions in the
licenses to each and all of the said firms or corporations to
be otherwise like those set forth in this agreement).

(12) It is mutually covenanted and agreed by and be¬
tween the Licensor and Licensee that, unless sooner ter¬
minated, as hereinbefore and hereinafter provided, this
agreement, and the license granted thereby, shall take effect
on February 1, 1909, and shall continue until June 20, 1910,
but that the Licensee may renew this agreement and license
thereafter from year to year upon the same terms, conditions,
and stipulations as herein provided, by giving notice to the
Licensor on or before the 20tli day of March in each year be¬
ginning with the year 1910, of the Licensee’s election to so
renew this agreement and license, and upon the giving of
each such notice this agreement and the license thereby
granted shall be considered and treated by the Licensor and
Licensee as renewed for the period of one year, beginning
June 20th of the year following such notice, and such notice
and renewal may be given and made by the Licensee during
the life or lives of each or all of the patents under which the
Licensee is hereby licensed.

In case, however, that the Licensor should become bank¬
rupt, cease doing business, or should be dissolved, voluntarily
or otherwise, or its charter should be repealed, then, on the
happening of e tlier of such events, this agreement and the
with the additional Licensee hereinbefore
piovi^ed for, that are then in force, shall forthwith ter¬
minate and be at an end.

kJmL" covenanted and agreed by

and between the Licensor and Licensee, that if, during said
original term or during any such renewal period, either

party should, knowingly or through gross neglect or care¬
lessness, be guilty of a breach, violation, or nonperformance
of its covenants, conditions, and stipulations resulting in
substantial injury to the other party, and should, for the
period of forty (40) days after notice thereof from the other
party persist therein or fail to correct, repair, or remedy the
same, then and in such case the party aggrieved may ter¬
minate this agreement by giving notice in writing to the
gnilty party of its intention so to do. It is, however,
mutually covenanted and ngreed by and between the Licensor
and Licensee that if the guilty party should correct, repair,
or remedy such breach, violation, or nonperformance of its
covenants, conditions, and stipulations within the said
period of forty (40) days after such notice, and should there¬
after knowingly or through gross neglect or carelessness be
guilty of a second breach, violation, or nonperformance of
its covenants, conditions, and stipulations, resulting in
substantial injury to the other party, then and in such case,
the party aggrieved may terminate this agreement by giving
thirty (30) days’ notice in writing to the guilty party of its
intention so to do. Such termination of the agreement,
however, shall not prejudice either party hereto in the
recovery of damage because of any such breach, violation, or
nonperformance by the other party hereto.

(14) All notices provided for in this agreement, shall be
in writing and shall be given by delivering the same to the
Licensor or Licensee, as the case may be, or by depositing
such notices, postage prepaid, in any post office of the
United States, in a sealed envelope directed to the Licensor
or Licensee, as the case may be, at its last known post-office
address, to be forwarded by registered mail.

(15) It is mutually covenanted and ngreed by and between
the Licensor and Licensee that after notice of the termination
of this agreement and the license granted thereby by either
party, as provided for in paragraph 13 of this agreement,

. and after the same have been terminated, no matter what the
cause or manner of termination may be, neither this license
agreement, nor the fact that the Licensee lias entered into

98 ORIGINAL PETITION, EXHIBIT 5.

or acted under it, shall he used in any manner, directly or
indirectly, by or for the Licensor, its successors, assigns or
legal representatives or hy or for others with its or their
consent or permission, against the Licensee, or the Licensee’s
successors or legal representatives, in any litigation, con¬
troversy or proceeding involving the Licensee, or them or
any other persons, firms or corporations, or in any other way,
it being understood and agreed that upon such termination
the positions and rights of the Licensor and Licensee shall be
the same as if this agreement had not been made; provided,
however, that the rights of neither party shall be prejudiced
by such termination in the recovery of damages for any
breach or other violation of this agreement by the other
occurring prior to such termination.

In witness whereof, the parties hereto have caused this
agreement to be executed by their officers duly authorized
to perform those acts, the day and year first above written.

Motion Picture Patents Company,
By Frank L. Dyer, President.

Armat Moving Picture Company,
By Thos. Armat, President.

Attest:

George F. Scull, Secretary.

Attest:

Louis H. Stabler, Secretary.

1
; /S

V'V

Charter of General Film Company, April 18,
1910.

State op Maine;

Certificate of organization of a corporation under the general
law.

The undersigned, officers of a corporation organized at
Portland, Maine, at a meeting of the signers of the articles
of agreement therefor, duly called and held at No. 9E>
Exchange Street, in the city of Portland, State of Maine, on
Monday, the eighteenth day of April, A. D. 1910, hereby
certify as follows:

The name of said corporation is General Film Company.

The purposes of said corporation are—

For the purpose of buying, selling, or otherwise acquiring
or disposing of letters patent and licenses under letters patent
for inventions pertaining to the production and use of pho¬
tographic or other negatives and photographic or other posi¬
tives, of objects at rest and objects in motion; manufacturing,
buying, using, selling, or otherwise acquiring or disposing of, or
leasing, apparatus, materials, processes, and rights, pertaining
to the production and use of photographic or other negatives
and photographic or other positives, of objects at rest and
objects in motion; manufacturing, buying, using, selling, or
otherwise acquiring or disposing of, or leasing, photographic or
other negatives and photographic or other positives of objects
at rest and objects in motion; manufacturing, buying, using,
selling, or otherwise acquiring or disposing of, or leasing,
apparatus and materials of every character used in exhibi¬
tions, entertainments, motion-picture shows and theatrical
performances, and in equipping theaters, halls,’ and similar
99

100

ORIGINAL PETITION) EXHIBIT 6.

ORIGINAL PETITION,

EXHIBIT 0.

101

places of amusement, entertainment, and instructions; pur¬
chasing and holding such real and personal property necessary
for or incidental to the purposes of this company, or any of
them; mortgaging, leasing, selling, or disposing of by agree¬
ment or otherwise, and conveying, any and all of the real or
personal property of the corporation; buying or otherwise
acquiring and holding, selling, or otherwise disposing of,
the stocks, bonds, notes, and other evidences of indebtedness
of any domestic or foreign corporation, and issuing and
delivering its stock, bonds, or other obligations in payment
or exchange for stock, bonds, and other obligations of other
corporations organized for purposes similar to the purposes
of this corporation or conducting a business similar to that
herein provided for or capable of being conveniently carried
on in connection with the business above described; conduct¬
ing its business in all its branches, and having one or more
offices; holding, leasing, or conveying real or personal prop¬
erty in all States and in all foreign countries to which the
business of the company may be extended, and borrowing
money and doing any acts to protect and improve the business
of the corporation and enhance the value of its property.

To issue any and all bonds necessary to the business of
the corporation, and to secure the same by mortgage, deed
of trust, or any other form of conveyance; to issue as pre¬
ferred stock such part of its capital stock as shall be flxed
aiid’ determined in the by-laws; to acquire and undertake
the whole or any part of the business, property, assets, and
liabilities of any person, firm, or corporation engaged in
a business similar to that herein provided for, or capable
of being conveniently carried on in connection with the
business above described; to do all or any part of the above
things as principals, agents, contractors, or otherwise, and
by or through agents, or otherwise, and either alone or in
conjunction with others; and to do any and all things inci¬
dental to the prosecution of the purposes herein contained,
or any of them, and not inconsistent with the laws of the
State of Maine.

The amount of capital stock is two million ($2,000,000)
dollars.

The amount of preferred stock is one million live hundred
thousand ($1,500,000) dollars.

The amount of common stock is five hundred thousand
($500,000) dollars.

The amount of capital stock already paid in is eleven
thousand four hundred ($11,400) dollars.

The par value of the shares is one hundred ($100) dollars

The names and residences of the owners of said shares
arc as follows :

George Kleine . : .

George K. Spoor .

Blograph Company..

leaving in the treasury, unsubscribed for 10,880 shares, of
which 14,991 are preferred and 4,895 are common.

Said corporation is located at Portland, in the county of
Cumberland.

The number of directors is ten and their names are Prank L.
Dyer, J. A. Berst, Gaston Melies, William M. Selig, Sicgmund
Lubin, Samuel Long, J. J. Kennedy, William T. Bock,
George Kleine, and .George K. Spoor. .

The name of. the clerk is. L. L. Highland his residence is
Portland, Maine,

102

ORIGINAL PETITION, EXHIBIT 6.

Tlie undersigned, J. J. Kennedy, is president; the under¬
signed J. A. Berst, is treasurer, and the undersigned, J. J.
Kennedy, J. A. Berst, George Kleine, Samuel Long, Sieg-
mund Lubin, W. M. Selig, Gaston Mclics, and William T.
Bock are a majority of the directors of said corporation.
Witness our hands this eighteenth day of April, A. D. 1910.

J. J. Kennedy,

President.

J. A. Berst,

Treasurer.
J. J. Kennedy,

J. A. Berst,

George Kleine,
Samuel Long,
Siegmund Lubin,

W. M. Selig,

Gaston Mblies,

Wm. T. Kook,

. Directors.

Portland, Maine, April 15, 1910.

Then personally appeared J. J. Kennedy, J. A. Berst,
George Kleine, Samuel Long, Siegmund Lubin, Wm. M.
Selig, Gaston Melies, and William T. Bock, and severally
made oath to the foregoing certificate, that the same is true.

Before me,

Harry P. Sweetser,
Justice of the Peace.

State op Maine,

Attorney General’s Oppioe,

April SO, 1910.

I hereby certify that I have examined the foregoing certifi¬
cate, and the same is properly drawn and signed, and is con¬
formable to the constitution and laws of the State.

Charles P. Barnes,
Asst. Attorney General.

•fU

iSf

original petition, exhibit 6. 103

(Endorsed:) Copy. (Name of corporation) General Film
Company. Cumberland, SS. Begistry of Deeds. Kcceived
April 21, 1910, at 10 h. 5 m. a, m. Becordcd in vol. 42,
page 69. Attest: Frank L. Clark, Begister. A true copy
of record. Attest: Frank L. Clark, Begister. State of Maine.
Office of Secretary of State. Augusta, April 21, 1910.
Beceived and filed this day. Attest: A. I. Brown, Secretary
of State. Bccorded in vol. 73, page 309.

65498-12 - 14

Agreement Between Motion Picture Patents

Company and General Film Company,

April 21, 1910.

1 This agreement, made this 21st day of April, 1910, by
and between the Motion Picture Patents Company, a cor-
' poration organized and existing under the laws of the State
of New Jersey, and having an office in the city, county, and
State of New York, party of the first part (hereinafter
referred to as the Licensor), and the General Film Company,
a corporation organized and existing under the laws of the
State of Maine, and having an office in said city of New
York, party of the second part (hereinafter referred to as
the Licensee), witnesseth that: _

2. Whereas the Licensor represents that it is organized
to own, deal in, and grant licenses under letters patent per¬
taining to the motion-picture art, and that it is the owner of
all the right, title, and interest in and to the following United
States Letters Patent relating to that art—

No. 578185, dated March 2, 1897, for vitascope, granted to
Thomas Armat.

No. 580749, dated April 13, 1897, for vitascope, granted to
Thomas Armat.

No. 580953, dated July 20, 1897, for plmntoscope, granted
to Charles F. Jenkins and Thomas Armat.

No. 588916, dated August 24, 1897, for kinetoscope,
granted to Charles M. Campbell, as the assignee of Willard
G. Steward and Ellis F. Frost.

No. 6290G3, dated July 18, 1899, for kinetoscopic camera,
granted to American Mutoscope Company as the assignee of
Herman Casler.

No. 673329, dated April 30, 1901, for kinetoscope, granted
to The American Yitagraph Company ns the assignee of
Albert E. Smith.

ORIGINAL PETITION, EXHIBIT 7. 105

No. 673992, dated May 14, 1901, for vitascope, granted to
Thomas Armat.

No. 707934, dated August 26, 1902, for projecting kineto¬
scope, granted E. & H. T. Anthony & Co., as assignees of
Woodville Latham.

No. 722382, dated March 10, 1903, for animated-picture
apparatus, granted to American Mutoscope and Biograph
Company as the assignee of John A. Pross;

No. 744251, dated November 17, 1903, for kinetoscope,
granted Albert E. Smith;

No. 770937, dated September 27, 1904, for kinetoscope,
granted the Vitngraph Company of America as the assignee
of Albert E. Smith ;

No. 771280, dated October 4, 1004, for winding reel,
granted Albert E. Smith ;

No. 785205, dated March 21, 1905, for fiame-sliield for
kinetoscopcs, granted the Vitagrapli Company of America
ns the assignee of William Ellwood ; and

No. 785237, dated March 21, 1905, for film-holder for
kinctoscopes, granted the Yitagraph Company of America
as the assignee of Albert E. Smith; and

3. Whereas, the Licensor is the owner of all the right,
title, and interest in and to reissued letters patent of the
United States numbered 12,192, dated January 12th, 1904,
the original letters patent whereof are numbered 5891G8 and
dated August 31, 1897, under which reissued letters patent
licenses have been granted to the Edison Manufacturing
Company of Orange, New Jersey; Pathe Freres, of New
York, New York; the Kolem Company (Inc.), of New
York, New York; the Essanay Film Manufacturing Com¬
pany of Chicago, Illinois; the Lubin Manufacturing Com¬
pany of Philadelphia, Pennsylvania; Gaston Melics, of New
York, New York, (for himself and as attorney in fact for
George Melics of Paris, France) ; the Selig Polyscope Com¬
pany of said Chicago; the Vitagrapli Company of America,
of New York, New York; George Kleine of said Chicago, and
the Biograpli Company, of New York, New York (which
licensees are, with their successors as -.such, hereinafter
referred to ns “Patents Company Licensees”) ; and

10G ORIGINAL PETITION, EXHIBIT 7.

4. Whereas, the Licensee desires to obtain from the
Licensor a license under said reissued Letters Patent 12192,
and to lease positive motion pictures in certain territory, for
use in exhibiting or projecting machines containing the
inventions, or any of them, described and claimed in said
Letters Patent Nos. 578185, 580749, 5SG953, 58891G, 073329,
G73992, 707934, 722382, 744251, 770937, 771280, 785205, and
785237, and to sell positive motion pictures in certain other
territory;

5. Now, therefore, the parties hereto, for and in consid¬
eration of the sum of one dollar to each paid by the other,
and for other good and valuable considerations from each to
the other moving, receipt of all of which is hereby acknowl¬
edged, have agreed as follows :

G. The Licensor hereby grants to the Licensee, for the
term and subject to the covenants, conditions, and stipula¬
tions hereinafter expressed, the right and license for the
United States, its territories, dependencies, and possessions
(hereinafter called the “territory aforesaid”) to have posi¬
tive motion pictures manufactured for it by “Patents Com¬
pany Licensees,” and which motion pictures it shall own,
on film of a greater width than approximately one inch,
embodying the inventions of said reissued Letters Patent
No. 12192, from negative motion pictures made in foreign
countries and which are procured by it from others than
“Patents Company Licensees,” and to purchase positive
motion pictures manufactured in foreign countries, and to
lease said positive motion pictures, so manufactured for and
purchased by it, in the United States, its territories, depend¬
encies, and possessions (with the exceptions of its insular
possessions and Alaska), hereinafter referred to ns the
“lease territory aforesaid,” to motion picture exhibitors
upon condition that they be used solely in exhibiting or pro¬
jecting machines containing the inventions or some of them
of said Letters Patent Nos. 578185, 580749, 58G953, 58891G
073329, 073992, 707934. 722382, 744251, 770937, 771280.
785205, and 785237, and licensed by the Licensor and to
sell said positive motion pictures so manufactured for and

ORIGINAL PETITION, EXHIBIT 7. ][)7

purchased by it, in or for said insular possessions and Alaska
and foreign countries, hereinafter referred to as “said export
territory” or “for export”; it being understood and agreed
by the Licensor and Licensee that the latter in the leasing
of a positive motion picture shall not be limited to a single
lease thereof to one motion picture exhibitor, but that it
may, subject to the provisions of section 5 of paragraph
hereof numbered 14, lease the same as often and to as many
different motion picture exhibitors as it may desire.

The License hereby granted is personal to the Licensee
and, in the event of the permanent discontinuance or retire¬
ment from business of the Licensee for a period of six con¬
secutive months, the license hereby granted shall be imme¬
diately terminated.

7. The Licensee hereby recognizes and admits the validity

of said reissued Letters Patent No. 12192 and Letters Patent
Nos. 578185, 580749, 58G953, 58891G, G73329, G73992

707934, 7223S2, 744251, 770937, 771280, 785205, and 785237
and agrees not to contest or question the same during the
continuance of this agreement.

8. The Licensee covenants and agrees that all positive
motion pictures manufactured for it, in the “territory
aforesaid,” during the continuance of this agreement, will
be so manufactured for it only by “Patents Company
Licensees”; that in the manufacture of such positive motion
pictures in the “territory aforesaid,” it will have used only
negative motion pictures made in foreign countries and
procured by it from others than “Patents Company Licen-
secs”; and that it will not, in the “territory aforesaid,” pur¬
chase or otherwise acquire or lease or sell or otherwise dispose
of or deal in positive motion pictures except those manufac¬
tured for and purchased by it as aforesaid, without the con-
sent in writing of the Licensor, nor sell or otherwise dispose
of any negative motion pictures.

9. The Licensee covenants and agrees that it will, after
the license hereby granted takes effect, pay royalty to the
Licensor between the first and fifteenth days of each month
on all negative morion pictures procured and positive

10S ORIGINAL PETITION, EXHIBIT 7.

motion pictures purchased by it as aforesaid during the
preceding month, at the maximum rate of onelinlf (Vs) cent
per running foot hereinafter provided for; that it will keep
accurate hooks of account and submit statements at the
time of making such payments (sworn to, if required by the
Licensor) giving the total number of running feet of such
motion pictures, classified according to subjects, which the
Licensee has so procured and purchased during the preceding
month; that the Licensor shall have the right to inspect, its
books of account, through any reputable chartered ac¬
countants, to determine the amount of such motion pictures
- which it shall have so procured and purchased after the license
hereby granted takes effect; and that any failure to pay
the said royalties when due and payable, or any making of
a false return by the Licensee of the amount of such motion
pictures so procured and purchased by it, shall make the
license hereby granted terminable by the Licensor.

10. The Licensor further covenants and agrees that the
royalties which it will charge to the Licensee for negative
motion pictures procured and positive motion pictures pur¬
chased by the Licensee ns aforesaid shall not, during the
year preceding June 20, 1910, and during any year thereafter
during the continuance of this agreement, as hereinafter pro¬
vided, exceed the following rates— that is to say :

If the amount of such motion pictures for any such year
be four million running feet or loss, a royalty of one-half (y2l
cent per running foot on the total number of running feet
for that year; if the amount thereof for any such year ex¬
ceed four million running feet but do not exceed six million
running feet, a royalty of four and one-half (4i/») mills per
running foot on the total number of running feet for that
year; if the amount thereof for any such year exceed six
million running feet but do not exceed eight million running
feet, a royalty of four (4) mills per running foot on the total
number of running feet for that year; if the amount thereof
for any such year exceed eight million running feet but do
not exceed ten million running feet, a royalty of three and
three-quarters (3%) mills per running foot on the total num-

ORIGINAL PETITION, EXHIBIT 7. 109

ber of running feet for that year; and if the amount thereof
for any such year exceed ten million running feet, a royalty
of three and one-quarter (3%) mills per running foot on the
total number of running feet for that year.

The Licensor further covenants and agrees that it will,
within thirty (30) days after June 20 of each year, repay
to the Licensee any excess of royalties which may have been
paid by the Licensee during the year by reason of the differ¬
ence between the rate of one-lialf (fA) cent per running foot
which the Licensee shall have paid and the rate, based on the
total amount of such motion pictures procured and purchased
by it for the year, which the Licensee should have paid ac¬
cording to the foregoing schedule, the royalty rate to be
charged for the period between the date hereof and June 20,
1910, to be that which would have been charged if the pro¬
curing and purchasing of such motion pictures by the
Licensee had been continued for a year at the same rate at
which they were so procured and purchased for such period.

The Licensor and Licensee further mutually covenant and
agree that no royalty other than or in addition to that pro¬
vided for in this paragraph shall be charged to or collected
from the Licensee by the Licensor up to June 20, 1911; or
during any renewal of this agreement up to August 31, 1914,
the date of the expiration of said reissued Letters Patent
No. 12192, and no royalty whatever shall be charged to or
collected from the Licensee by the Licensor after either of
the claims of said reissued Letters Patent No. 12192 and
either of the claims of reissued Letters Patent No. 12037,
dated September 30, 1902 (owned by the Licensor' and under
which all of the Patents Company Licensees, with the excep¬
tion of George Kleinc, have been licensed), in any suit for
infringement thereof, is hold invalid by a court that last
hears and decides such suit, or after August 31, 1914, during
any renewal of this agreement.

11. The Licensee further covenants and agrees not to sell
or otherwise dispose of or offer for sale, sin the “territory
aforesaid,” unexposed positive or negative motion picture
films during the continuance of this agreement; hut this

110

ORIGINAL PETITION, EXHIBIT 7.

Ill

provision shall not prevent the Licensee from selling, as
refuse, in the "territory aforesaid,” second-hand positive or
negative motion pictures which have been used or become
shopworn or in any way damaged, to a manufacturer or
manufacturers licensed by the Licensor to manufacture
sensitized motion picture Him for “Patents Company
Licensees,” or to a manufacturer to manufacture other
articles than Him therefrom, hut only after they have been
rendered by the Licensee unsuitable for use as motion
pictures by cutting or otherwise defacing them; nor from
selling exposed positive or negative film (either waste or in
rolls) known as “blank film” for use by exhibitors for
leaders or for spacing or for similar purposes, but which
shall not and can not be otherwise employed for the exhibi-
tion of motion pictures.

12. The Licensee further covenants and agrees not to lease,
loan, rent out, sell, or offer for sale, or otherwise dispose of in
the “territory aforesaid,” motion pictures to anyone purchas¬
ing or otherwise obtaining, leasing, using, loaning, renting
out, selling, offering for sale, or otherwise disposing of or
dealing in motion pictures containing the invention of said
reissued Letters Patent No. 12192, not the output of the
Licensee or of other licensees of the Licensor under said
Letters Patent.

13. It is further mutually covenanted nnd agreed by tin
Licensor and Licensee that the Licensee shall have the rigid
to sell motion pictures, manufactured for or purchased by ii
as aforesaid, in or for “said export territory,” when the goods,
addressed to the purchaser, agent, or consignee, are delivered
to the vessel or to a transportation company for transporta¬
tion to said export territory*” and not otherwise; but in no
case shall sales “for export” of motion pictnres be knowingly
made by the Licensee to persons, firms, or corporations whom
such Licensee has reason to believe will reimport them into
the “lease territory aforesaid” for sale or use.

14. It is further mutually covenanted and agreed by and
between the Licensor nnd Licensee that no lease of positive
motion pictures manufactured for or purchased bv the

Licensee, as aforesaid, shall be made in the “lease territory
aforesaid” by the Licensee, except upon and subject to the
following terms and conditions, namely: (1) That the lessee
of such positive motion picture shall not sell or otherwise
dispose of the same, but shall only have the right to use such
positive motion picture in giving motion-picture exhibitions
in machines licensed by the Licensor under the said Letters
Patent Nos. 578185, 5S0749, 58G953, 58891G, G73329, G73992,
707934, 722382, 744251, 770937, 771280, 785205, and 785237,
or one or more of them, or under any other letters patent that it
may hereafter acquire or control; and (2) that the lessee shall
not make or permit others to make any reproduction com¬
monly known as a “dupe” of such positive motion picture or
any other positive motion picture containing the invention
of said reissued Letters Patent No. 12192; and (3) that the
lessee shall not sublet such motion picture; and (4) that the
lesseo of such positive motion picture shall not remove the
trade-mark or trade name or title therefrom; and (5) that
the Licensee shall on the first day of every month, beginning
with December 1, 1910, withdraw from the market an amount
of such positive motion pictures (not leased by the Licensee
over twelve months before) equal to the amount of such
positive motion pictures that was so leased by it during the
seventh month preceding the date of each such withdrawal,
with the exception, however, that where any such positive
motion pictures are destroyed by fire or lost in transporta¬
tion the amount so destroyed or lost shall be deducted from
the amount to be withdrawn as aforesaid; and (6) that the
violation of any of the foregoing conditions entitles the lessor
to immediate possession of such motion picture without
liability for any price which the lessee or the person in whose
possession it is found may have paid therefor.

15. The Licensee covenants nnd agrees that in the “lease
territory aforcaid” the Licensee will dispose of the positive
motion pictnres manufactured for and purchased by it, as
aforesaid, only by the sale “for export” and shipment there¬
of into “said export territory” or by the lease thereof to
motion-picture exhibitors for the purpose only of using such

112 ORIGINAL PETITION, EXHIBIT 7.

motion pictures for giving exhibitions thereof in exhibiting
or projecting machines licensed by the Licensor containing
the inventions, or some of them, described and claimed in
said Letters Patent Nos. 578185, 580749, 58G953, 58891G,
073329, 673992, 707934, 722382, 744251, 770937, 771280,
785205, and 785237, or in Letters Patent hereafter acquired
or controlled by the Licensor; and will not nse the same for
the purpose of giving exhibitions thereof for profit, directly
or indirectly; it being expressly understood and agreed by
and between the Licensor and Licensee, however, that the
Licensee shall he at liberty to give exhibitions of such posi¬
tive motion pictures without profit, directly or indirectly,
and to possible or prospective lessees or purchasers thereof;
and the Licensee further covenants anti agrees not to know¬
ingly allow positive motion pictures manufactured for or
purchased by it under this agreement to be used with any
exhibiting or projecting machine not licensed by the Licensor
under the Letters Patent mentioned in this paragraph, and
that it may hereafter acquire or control; or one or more of
them, except by and with the consent of the Licensor;
and also to refrain from supplying such motion pictures
manufactured for or purchased by it under this agreement,
for use with any exhibiting or projecting machine, the
license for which, under the aforesaid Letters Patent, or one
or more of them, has been terminated, and the Licensee has
been notified thereof by the Licensor; and also to refrain
from supplying such motion pictures manufactured for and
purchased by it under this agreement to any lessee who
may loan or sublease such motion pictures and the Licensee
has been notified thereof by the Licensor, or who may nse
such motion pictures for giving exhibitions thereof in ex¬
hibiting or projecting machines not licensed by the Licensor
as aforesaid, or the license for which lias been terminated
and the Licensee has been notified thereof by the Licensor;
and the Licensor covenants and agrees to promptly notify
the Licensee and all other persons, firms, and corporations
licensed under said reissued Letters Patent No. 12192 of
the termination of any license for the nse of any exhibiting

ORIGINAL PETITION, EXHIBIT 7. 113

or projecting machines under the aforesaid Letters Patent,
or any of them.

16. The Licensor and Licensee further mutually covenant
and agree that if in any suit brought upon said reissued
Letters Patent No. 12192 either of the claims of said reis¬
sued Letters Patent No. 12192 is held invalid by a court
that last hears and decides such suit, or should be held by
such court not to be infringed, then, and in any such case, the
Licensee may at once terminate this agreement and the
license thereby granted, by giving notice of its election so
to do to the Licensor.

17. The Licensor and Licensee further mutually covenant
and agree that by the expression “motion pictures” as used
in the foregoing agreement is meant transparent or translu¬
cent tapelike film having photographs thereon of objects in
motion.

18. It is further mutually covenanted and agreed by
and between the Licensor and Licensee that, unless sooner
terminated, as hereinbefore or hereinafter provided, this
agreement and the license granted thereby shall take effect'
at the date hereof, and shall continue until June 20, 1911,
but that the Licensee may renew this agreement and license
thereafter from year to yenr upon the same terms, conditions,
and stipulations as herein provided by giving notice to
the Licensor on or before April 20 of each year, beginning
with the year 1911, of the Licensee’s election to so renew
this agreement and license, and upon the giving of each
such notice this agreement and the license thereby granted
shall be considered and treated by the Licensor and Licensee
as renewed for a period of one year, beginning June 20th of
the year following such notice, except that the last renewal
period shall be for the period from June 20, 1914, to August-
26, 1919,^ the’ date of expiration of the Letters Patent
No: 707934.

It is further mutually covenanted and agreed by and
between the Licensor and Licensee that , if, during said
original term or during any such renewal -period, i either
party should .-knowingly or through gross neglect or care-

114

ORIGINAL PETITION, EXHIBIT 7.

lessness be guilty of a breach, violation, or nonperformance
of its covenants, conditions, and stipulations, resulting in
substantial injury to the other party, and should for the
period of forty (40) days after notice thereof from the other
party persist therein or fail to correct, repniv, or remedy
the same, then and in such case the party aggrieved may
terminate this agreement by giving notice in writing to the
guilty party of its intention so to do. It is, however,
mutually covenanted and agreed by and between the
Licensor and Licensee that if the guilty party should cor¬
rect, repair, or remedy such breach, violation, or non¬
performance of its covenants, conditions, and stipulations
within the said period of forty (40) days after such notice,
and Bhould thereafter knowingly or through gross neglect or
carelessness be guilty of a second breach, violation, or non¬
performance of its covenants, conditions, and stipulations,
resulting in substantial injury to the other party, then and
in such case the party aggrieved may terminate this agree¬
ment by giving thirty (30) days’ notice in wilting to the
guilty party of its intention so to do. Such termination of
the agreement, however, shall not prejudice either party
hereto in the recovery of damages because of any such
breach, violation, or nonperformance by the other party
hereto.

19. All notices provided for in this agreement shall be in
writing and shall be given by delivering the same to the
Licensor or Licensee, as the case may be, or to an officer of
the Licensor or Licensee, as the case may be, or by depositing
such notice, postage prepaid, in any post office of the United
States, in a sealed envelope directed to the Licensor or the
Licensee, as the case may be, at its last known post-office
address, to be forwarded by registered mail.

20. It is mutually covenanted and agreed by and between
the Licensor and Licensee that after notice of the termination
of this agreement and the license granted thereby by either
party, as provided for in paragraphs 16 and 18 of this agree¬
ment, and after the same have been terminated, no matter
what the cause or manner of termination may be, neither

ORIGINAL PETITION, EXHIBIT 7. 115

this license agreement, nor the fact that the Licensee has
entered into or acted under it, Bhall be used in any manner,
directly or indirectly, by or for the Licensor, its successors,
assigns or legal representatives, or by or for others with its
or their consent or permission, against Licensee, or the
Licensee’s successors or legal representatives, in any litiga¬
tion, controversy or proceeding involving the Licensee or
them or any other persons, firms or corporations, or in any
other way, it being understood and agreed that upon such
termination the positions and rights of the Licensor and
Licensee shall be the same as if this agreement had not
been made; provided, however, that the rights of neither
party shall be prejudiced by such termination in the recovery
of damages for any breach or other violation of this agree¬
ment by the other occurring prior to such termination.

In witness whereof, the parties hereto have caused this
agreement to be executed by their officers duly authorized
to perform these acts, the day and year first above written.

Motion Picture Patents Company,
By Prank L. Dyer, President.

General Film Company,
By J. J. Kennedy, President.

Attest:

George P. Soull,

Secretary.

Exhibit 8.

Agreement Between General Film Company
and Edison Manufacturing1 Company,
April 21, 1910.

1. Articles of agreement, made and entered into tliis -

day of - , 1010, by and between the Edison Manufac¬

turing Company, a corporation organized and existing under
tbe laws of the State of New Jersey, and having an office in
the city of Orange in Baid State, party of the first part, and
the General Film Company, a corporation organized and
existing under the laws of the State of Maine, and having an
office in the city, county, and State of New York, parly of
the second part; witnessetli that:

2. Whereas the party of the first part has been licensed by
the Motion Picture Patents Company; of New York City, to
manufacture motion pictures by the use of cameras under
reissued Letters Patent No. 12037, dated September 30, 1902,
Letters Patent No. 029063, dated July 18, 1899, and Letters
Patent No. 707934, dated August 20, 1902, and containing
the inventions of reissued Letters Patent No. 12192, dated

January 12, 1904, - , and to lease positive motion

pictures so manufactured - by it (hereinafter referred

to as “Licensed Motion Pictures”) for use on projecting
machines licensed by said Motion Picture Patents Company
(hereinafter referred to as “Licensed Projecting Machines”)
under Letters Patent Nos. 578185, 580749, 580953, 588910,
037329, 073992, 707934, 722382, 744251, 770937, 771280,
785205, and 785237, owned by said Motion Picture Patents
Company, covering motion picture projecting machines; and

3. Whereas, the party of the second part has been licensed
by said Motion Picture Patents Company to lease such
“Licensed Motion Pictures,” but only on film of a greater
width than approximately one (1) inch, from persons, firms
and corporations licensed by said Motion Picture Patents
Company to manufacture or manufacture and import such

ORIGINAL PETITION, EXHIBIT 8.

"Licensed Motion Pictures,” and to sublet the said “Licensed
Motion Pictures ” in certain territory (which, however, may
hereafter be extended), to motion picture exhibitors for use
on “Licensed Projecting Machines”; and has also been
licensed by said Motion Picture Patents Company to have
positive motion pictures (hereinafter included in' 'the term
“Licensed Motion Pictures”) manufactured for it by certain
of said licensees, including the party of the first part (and
hereinafter referred to as the “Patents Company Licensees
aforesaid”) on film of the width aforesaid, embodying the
inventions of said reissued Letters Patent No. 12192 from
negative motion pictures made in foreign countries and
which are procured by it from others than the “Patents
Company Licensees aforesaid,” and which positive motion
pictures it shall own, and also to purchase positive motion
pictures (hereinafter included in the term “Licensed Motion
Pictures”) manufactured in foreign countries, and to lease
all said positive motion pictures to motion picture exhibit¬
ors for use by such exhibitors on “Licensed Projecting
Machines”; and

4. Whereas, the party of the second part is desirous of
leasing “Licensed Motion Pictures,” on film of the width
aforesaid, from the party of tbe first part for the purpose of
subleasing the same to motion picture exhibitors, under its
license aforesaid from the Motion Picture Patents Company;

5. Now, therefore, the parties hereto of the first and sec¬
ond parts do hereby covenant and agree as follows:

0. The party of the first part covenants and agrees that
it will, during the continuance of this agreement, supply
the party of the second part with ns mnny copies of each
“Licensed Motion Picture,” released by the party of the
first part, on film of the width aforesaid, as the party of
the second part requires for the conduct of its business,
and will so supply them at the same leasing prices and
otherwise upon the snme terms and conditions ns it, at
corresponding times, lenses such “Licensed Motion Pictures”
to other persons, firms, or corporations, and that it will not,
dnring the continuance of this agreement, discriminate
against the party of the second part, in favor of other per-

118 ORIGINAL PETITION, EXHIBIT 8.

sons, firms, or corporations to whom it leases sueli “Licensed
.Motion Pictures,” in filling orders for sueli “Licensed
Motion Pictures,” in terms of payment tlierefor or in any
other way which might give, or tend to give, such other
persons, firms, or corporations any advantage over the party
of the second part.

7. The party of the second part covenants and agrees
that it will, during the continuance of this agreement, lease
from the party of the first part “Licensed Motion Pictures,”
on film of the width aforesaid, at the prices and upon the
terms and conditions provided for in the last preceding
paragraph, and that it will, on each Monday, make or mail
payment to the party of the first part for all such “Licensed
Motion Pictures,” shipped by the party of the first part
to the party of the second part, on the order of the latter,
and for which the party of the second part has received
invoices from the party of the first part, during the preced¬
ing week; and that it will use its best efforts to intro¬
duce the same to and extend the use thereof by motion-
picture exhibitors using the “Licensed Projecting Machines,”
aforesaid; that for each sixty-two customers or the major
fraction thereof that it serves during any two consecutive
weeks during the continuance of this agreement from any
place of business operated by it for the purpose of lensing
and subleasing motion pictures among motion-picture
exhibitors, it will lease from the party of the first part, during
each such two consecutive weeks, and will distribute from
each such place of business, one reel, of a subject or subjects
released by the party of the first part not more than one
month previously, of approximately one thousand (1,000)
running feet of such “Licensed Motion Pictures,” and that
it will so lease such a reel for each such place of business
during any such two consecutive weeks, even if its cus¬
tomers, which it solves from such place of business during
such two consecutive weeks, do not aggregate sixty-two
customers or the major fraction thereof; it being expressly
covenanted and agreed, however, by and between the parties
hereto that the party of the second part shall not be required
to lease from the party of the first part move than eighty (SO)

ORIGINAL PETITION, EXHIBIT 8. 119

reels of approximately one thousand (1,000) running feet
per reel of “Licensed Motion Pictures” in any two con¬
secutive weeks; and further that it may lease “Licensed
Motion Pictures” on film of the width aforesaid from other
“Patents Company Licensees aforesaid” than the party of
the first part, and sublet such “Licensed Motion Pictures”
to motion-picture exhibitors.

8. The party of the second part further covenants and
agrees that it will, in addition to the leasing prices herein¬
before referred to, pay to the party of the first part, at the
end of each year during the continuance of this agreement,
the following share of the net profit realized by it during
that year from the subleasing and leasing, as aforesaid, of
“Licensed Motion Pictures,” to exhibitors and from the sale
of “Licensed Projecting Machines,” and from all other
sources, to wit: Such a proportion of the balance, if any, of
such net profit, remaining after deducting therefrom the
dividend of seven per cent (7 %) for that year on its issued
preferred stock and an amount equal to a twelve per cent
(12%) dividend on its issued common stock, ns the number of
running feet of “Licensed Motion Pictnres” leased by it
from the party of the first pnrt during that year hears to the
total amount of running feet of “Licensed Motion Pictures”
leased by it from all “Patents Company Licensees afore¬
said” during that year (“Licensed. Motion Pictures” manu¬
factured for or purchased by the party of the second part,
ns aforesaid, as well as “Licensed Motion Pictures” leased to
it by “Patents Company Licensees aforesaid” produced from
negatives made' on its order, to bo excluded).

9. It is mutually covenanted and agreed by and between
the parties hereto that by “net profit,” ns used in the last
preceding paragraph, is meant moneys remaining after
deducting from the gross earnings and income of the party
of the second part from “Licensed Motion Pictures” and
“Licensed Projecting Machines” and from all other sources,
all operating expenses connected with ' the business of the
party of tlie'sccond part.

10. It is mutually covenanted and agreed by add between
the parties hereto' that’ the yearly payments out of : the7 bnl-

120

121

ORIGINAL PETITION, EXHIBIT 8.

ance of net profit provided for in paragraph hereof- numbered
8 may, at the option of the party of the second part, be made
wholly or partly by promissory notes of the party of the sec¬
ond part bearing interest at the rate of six (6) per cent per
annum and each payable at a date not later than three years
from the date on which the payment for which it is issued is
due; provided, however, (a) that if, in any year it should
make payments in this manner to the party of the first part,
it shall for that year make payments in like manner to all of
the “Patents Company Licensees aforesaid” from whom it
may have leased “Licensed Motion Pictures” during that
year and who may be entitled to share in the balance of net
profit of that year provided for in paragraph hereof num¬
bered 8; (6) that if in any year it should make such payments
partly in cash and partly in promissory notes the cash shall
be apportioned among the several “Patents Company
Licensees aforesaid” according to the number of running feet
of “Licensed Motion Pictures” leased by each during that
year to the party of the second part, relatively to the total
amount of running feet leased by all to the party of the
second part during that year, and the notes shall be appoi-
tioned in like manner; and (c) that all notes issued by it in
™ „3’.enr.t“ the several "Patents Company Licensees afore¬
said in full or partial payment as aforesaid shall be alike
as to form, date, rate of interest, duration and place of
payment; shall be paid by it without preference to one
payee over another; shall bo fully paid by it before any cash

ComTnuv ° J ifc in subso<luent years to “Patents

Company Licensees aforesaid” on account of their share as '

naidTf bala“Ce °f Det P1'°flt f0r S,lch yeai'8: «>'all be

paid before any payment is made on the notes issued in

alL8}U1»Seqnen y<3arS t0 "Patents Company Licensees
muflT s “count of ««ch share of the balance of net
profit, and shall share pro rata, according to their respective
face values in any money to be used by it for nmking p r
tial payments on such notes. h P

14 *s further mutually covenanted and agreed by and
asdierainnft pait es be^oto that, unless previous* termLted
after provided, this agreement shall continue until

-■\Xf ORIGINAL PETITION, EXHIBIT 8.

August 2G, 1019, tile date of expiration of the letters patent
^ aforesaid No. 707034.

12> 14 is further mutually covenanted and agreed that if
tll,! ,icense to the party of the first part referred to in para-
graph hereof numbered 2 be terminated prior to August 26,
1919» t,le date of “Piration of said letters patent No. 707934,

I*”) or if the license aforesaid to the party of the second part to
lease “Licensed Motion Pictures” from the party of the first
part and other “Patents Company Licensees aforesaid” be
terminated prior to August 26, 1919, the date of the expira¬
tion of said letters patent No. 707934, then and in either of
such cases this agreement shall at once terminate.

13. It is further mutually covenanted and agreed by and
between the parties hereto that if either party should know¬
ingly or through gross neglect or carelessness be guilty of a
breach, violation, or nonperformance of its covenants, con¬
ditions, and stipulations resulting in substantial injury to the
other party, and should, for the period of forty (40) days
after notice thereof from the other party, persist therein or
fail to correct, repair, or remedy the same, then and in such
case the party aggrieved may terminate this agreement by
giving notice in writing to the guilty party of its intention
so to do; it being, however, mutually covenanted and agreed
by and between the parties hereto that if the guilty party
should correct, repair, or remedy such breach, violation, or
nonperformance of its covenants, conditions, and' stipulations
within the said period of forty (40) days nfter such notice,
and should thereafter knowingly, or through- gross neglect or
carelessness bo guilty of a second breach; violation, or non¬
performance of its covenants, conditions, and stipulations,
resulting in substantial injury to the other party, then and
in such case the party aggrieved may terminate this agree¬
ment, by giving thirty (30) days’ notice in writing to the guilty
party of its intention so to do. Snell termination of the
agreement, however, shall not prejudice either party hereto
in the recovery of damngos because of any such’ breach,
violation, or nonperformance by the other party hereto.

14. It is further mutually covenanted and agreed that
in case of the termination of this agreement as provided

122

ORIGINAL PETITION, EXHIBIT 8.

for in paragraphs hereof numbered 12 and 13, or in case the
party of the first part should become bankrupt, then at the
end of the year in which either of these events occurs the
party of the first part shall he entitled to such a propor¬
tion of the balance of net profit for that year, ns herein¬
before defined, as the number of running feet of “licensed
Motion Pictures” leased by the party of the second part
from it during that year hears to the total amount of run¬
ning feet of “Licensed Motion Pictures” leased by the
party of the second part from all “Patents Company
Licensees aforesaid” during that year (“Licensed Motion
Pictures” manufactured for or purchased by the party of
the second part, as aforesaid, as well as motion pictures
leased to it by “Patents Company Licensees aforesaid”
produced from negatives made on its order, to be excluded).

15. All notices provided for in this agreement shall
he in writing, and shall be given by delivering the same to
the party of the first part or the party of the second part,
as the case may he, or to an officer of the party of the first
part or the party of the second part, as the case may be,
or by depositing such notice, postage prepaid, in any post
office of the United States, in a sealed envelope directed
to the party of the first part or the party of the second part,
as the case may be, at its last known post-office address,
to be forwarded by registered mail.

, 10. It is further mutually covenanted and agreed by

land between the parties hereto that any rights hereby
jgranted by one party to the other are personal to and
nonassignable by the latter without the consent in writing
(of the former.

In witness whereof, the parties hereto have caused this
agreement to be executed by their officers duly authorized
to perform these acts, the day and year first above written.

Edison Manufacturing Company,
By Frank L. Dyer, Vice President.

In the presence of —

,T. J. Kennedy,
Wm. Pblzer,

Exhibit 9.

Reissued Letters Patent 12192.

United States Patent Office.

THOMAS A. EDISON, OF LLEWELLYN PARK, NEW
JERSEY.

To all whom it, may concern-.

Be it known that I, Thomas A. Edison, a citizen of the
United States, residing at Llewellyn Park, in the county of
Essex and State of New Jersey, have invented a certain new
and useful Improvement in Kinetoscopic Films (Case No.
928), of which the following is a specification.

The purpose I have in view is to produce pictures repre¬
senting objects in motion throughout an extended period of
time which may be utilized to exhibit the scene including
such moving objects in a perfect and natural manner by
means of a suitable exhibiting apparatus, such as that
described in an application filed simultaneously herewith
(Patent No. 493420, dated March 14, 1893). I have found
that it is possible to accomplish this end by means of pho¬
tography.

In carrying out my invention I employ an apparatus for
effecting by photography a representation suitable for repro¬
duction of a scene including a moving object or ■ objects
comprising a means, such as a single camera, for intermit¬
tently projecting at such rapid rate as to result in persistence
of vision images of successive positions of the object or
objects in motion as observed from a fixed and single point
of view, a sensitized tape-like film, and a means for so moving

124

ORIGINAL PETITION, EXHIBIT 9.

125

the film as to cause the successive images to be received
thereon separately and in single-line sequence. The move¬
ments of the tape-film are intermittent, and it is perferablc
that the periods of rest of the film should be longer than the
periods of movement. .... .

By taking the photographs at a rate sufficiently high as to
result in persistence of vision the developed photography
will, when brought successively into view by an exhibiting
apparatus, reproduce the movements faithfully and naturally.

I have been able to take with a single camera and a tape-
film as many as forty-six photographs per second, each hav-
inc a size measured lengthwise of tlie tape of one inch, and I
have also been able to hold the tape at rest for nine-tenths
of the time; hut I do not wish to limit the scope of my
invention to this high rate of speed nor to this great dis¬
proportion between the periods of rest and the periods of
motion, since with some subjects a speed as low as thirty
pictures per second or even lower is sufficient, and while it
is desirable to make the periods of rest as much longer than
the periods of motion as possible any excess of the periods of
rest over the periods of motion is advantageous.

In the accompanying drawings, forming a part hereof,
Figure 1 is a plan view, with the top of the casing removed,
of a form of apparatus which I have found highly useful for
the taking of the photographs. Fig. 2 is a vertical longi¬
tudinal section on line ® © in Fig. 1. Figs. 3 and 4 arc
enlarged views of the stop mechanism of the photographing
apparatus. Fig. 5 is a plan view of the shutter for the
photographing apparatus, and Fig. G is a perspective view
of a section of the tape-film with the photographs thereon.

Referring to the drawings, 3 indicates the transparent or
translucent tape-film, which before the apparatus is put in
operation is all coiled on a reel in the sheet-metal box or
case 1, the free end being connected to an empty reel in the
case 2. The film 3 is preferably of sufficient width to admit
the taking of pictures one inch in diameter between the rows
of holes 4, Figs. 2 and G, arranged at regular intervals along
the two edges of the film, and into which holes the teeth of

the wheels 5, Figs. 1 and 2, enter for the purpose of posi¬
tively advancing the film. When the film is narrow, it is
not essential to- use two rows of perforations and two feed-
wheels, one feed-wheel being sufficient. Said wheels are
mounted on a shaft G, which carries a loose pulley 7 — that is,
a pulley frictionally connected to its shaft and forming a
yielding mechanical connection. This pulley is driven by a
cord or belt 8 from a pulley 9 on the shaft 10, which shaft
is driven by means of the beveled gears 11 12. The wheel
12 is preferably driven by an electric motor 13, which when
the apparatus is in use is regulated to run at the desired
uniform speed, being controlled by the centrifugal governor
14 and the circuit-controller 15 in a well-known manner. On
the shaft 10 is another pulley 1G, which is connected by a
cross-belt 17 to a pulley 18, also frictionally connected to its
shaft, and which carries the reel to which the tape is con¬
nected in casing 2. The film passes from the casing 1 through
a slit formed by the edge 19 and the sliding door 20, which is
normally thrown forward by the spring 21, Fig. 2, with suffi¬
cient force to clamp the film and hold it from movement.
When the door 20 is retracted by pulling on the rod or string
22, which is connected to the arm 22', the film is liberated
and allowed to advance. Film-case 2 is provided with a
similar door, but the device for moving the door is not
illustrated. This arrangement of the sliding door not only
holds the film, but it tightly closes the casing, thus excluding
light and protecting the sensitive film. The casings or
boxes 1 2 are removable, so that they, with the inclosed film,
may be taken bodily from the apparatus; The shaft G, here¬
tofore referred to, is provided with a detent or stop-wheel 23,
the form of which is most clearly shown in Figs, 3 and 4.
Tlie wheel 23 -is provided with a number of projecting teeth
24,. six being shown, which teeth are adapted to strike suc¬
cessively against the face of the cooperating detent or stop-
wheel 25 on the shaft 2G, which is the armature-shaft of the
motor or a shaft which is constantly driven by the motor.
The wheel 25 has a corresponding number of notches 27 at
regular intervals around its periphery. These notches are

120 ORIGINAL PETITION, EXHIBIT 9.

of such size and shape that the teeth 24 can pa** through
them, and when the wheels 23 and 25 are rotated I«» tIie rirec-
tion indicated by the arrows each tooth in g„cce0ston will
strike the face of wheel 25, thereby bringing [jle film abso¬
lutely to rest at the same moment that an opening in the
shutter exposes the film, and will then pass tlu*0Uj.t* a notch*
allowing the tape-film to be moved forward n)|0tlier step
while it is covered by the shutter. To avoid t|le danger of
the wheel 25 moving so quickly that a tootli cnnnot enter
the proper notch, a laterally-projecting tool), is pro¬
vided adjacent to each notch. When a tooth 2iT stri1'03 a
tooth 24, the latter tooth will be guided by the (noth 29 into
the adjacent notch 27.

30 is a detent spring or pawl to prevent hnckwfl™! move¬
ment of the wheel 23.

I prefer to so proportion the parts above described that
the wheel 23 is at rest for nine-tenths of the tiine [,i order to
give to the sensitized film as long an exposure 88 practicable
and is moving forward one-tenth of the time and said
forward movement is made to take place thirty or’ „iore times
per second, preferably at least as high as forty.8,x times per
second, although the rapidity of movement or „ timber of
time's per second may be regulated as desired (0 give satis¬
factory results. The longer interval of rest of thc gjln insures
a good impression of the object projected o, croon and
results in a picture having clean and sharp ljne|l since the
film has sufficient time to become steady and Ovcrcome the
vibration caused by the sudden and rapid motion* of the
feed mechanism. On the shaft 26 or on any RuIt(1ble shaft
driven by the motor is a revolving disk 31, serving as a
sliutter for alternately exposing and covering » sensitive
film. This disk, which is continuously revolving i« provided
with six or any other suitable number of aimj.tlircs 32 at
regular intervals around it near the edge, thcv bring so
arranged that one of the apertures passes direc(tl«' between
the camera-lens 33 and the film each' time the (l])n j* brought
to rest, the light-rays passing through the oponin£r 33' and
falling on the film half-way between the reels 0n «-liich the
film is wound. 1

ORIGINAL PETITION, EXHIBIT 9. 127

34 is a device for adjusting the camera-lens toward or
from the film, and 35 is a device by means of which the opera¬
tor can focus the camera on thc object to be photographed.

Although the operation has been partially indicated in the
description of the apparatus, it will now be set forth more in
detail.

The apparatus is first charged with a sensitive tape-film
several hundred or even thousands of feet long and the motor
is set in operation. Since the spring 21 causes the door 20
to clamp the film, as already described, the loose pulleys 7 18
slip without pulling said film along; but when a moving
object— for example, a man gesticulating— is placed in the
field of the camera and the handle 22 is pulled the film is
released and the pulleys operate to pull the same along. At
the same time the reel in case 2 is rotated to wind up the film,
thus transferring it from the reel in case 1 to the reel in case
2. This movement is intermittent, the film advancing by
very rapid steps, which are definitely and positively controlled
by means of the peculiar detent or escapement described, and
a photograph is taken nfter each step.

While I do hot care to limit myself to any particular num¬
ber of steps, per second, there should be at least enough so
that thc eye of an observer cannot distinguish, or at least
cannot clearly and positively distinguish, at a glance a
difference in the position occupied by the object in the
successive pictures, ns illustrated in Fig. 7. A less speed in
taking the pictures will cause a trembling or jerky appearance
in the reproduced picture. When the movement of the
object being photographed lias ceased or the desired number
of photographs has been obtained, the apparatus is stopped.
The film is suitably treated for developing and fixing the
pictures, when it is ready for use in an exhibiting apparatus.
It will be observed that all the photographs on the film are
taken through the same camera-lens, which results in such
a uniformity 0f photographs as would be unattainable were
the photographs taken through different lenses.

65498-12 - 17

128

ORIGINA

\L PETITION, EXHIBIT 9.

Wliat 1 claim is—

1. An unbroken transparent or translucent tape-like
photographic film having thereon uniform sharply-defined
equidistant photographs of successive positions of an object
in motion as observed from a single point of view at rapidly-
recurring intervals of time, such photographs being arranged
in a continuous straight-line sequence, unlimited in number
save by the length of the film, and sufficient in number to
represent the movements of the object throughout an
extended period of time, substantially as described.

2. An unbroken transparent or translucent tape-like
photographic film provided with perforated edges and having
thereon uniform sharply-defined equidistant photographs of
successive positions of an object in motion as observed from
a single point of view at rapidly-recurring intervals of time,
such photographs being arranged in a continuous straight-
line sequence, unlimited in number save by the length of the
film, and sufficient in number to represent the movements of
the object throughout an extended period of time, substan¬
tially as described.

This specification signed and witnessed this 15th day of
December, 1903.

Thomas A. Edison.

Witnesses :

Frank L. DYEn,

Harry G. Waiters.

. DISTRICT COURT OP THE UNITED STATES
Fob tub Eastbbn District ok Pennsylvania.

United States of America, j

Petitioner, I

. ( .. No. 889.

) Sept. Sess., 1912.

Motion Picture Patents , Co; ami others, I
, . Defendants. I

New York City, October 21st, 1013.

Upon application of counsel for petitioner, counsel for
dcfeuduntH consenting thereto, the hearings were postponed
until 10:30 o’clock A. M.,' November 10th,- 1013, to be re¬
sumed at Manhattan Hotel. '

' New York City, November 10th, 1013.

The hearings were resumed pursuant to adjournment at
10:30 o’clock A. M., November 10th, 1013, at Manhattan
Hotel, New York City.

Present on behalf of the Petitioner, Hon. Edwin
P. Grosvenor, Special Assistant to the Attor¬
ney General.

J. R. Darling, Esq., Special Agent.

Present also, Messrs. Charles F. Kingsley George
R. Willis and Fred R. Williams, appearing
: for Motion Picture Patents Company, Bio¬
graph Company, Jeremiah J. Kennedy, Hurry
N. Marvin and Armat. Moving Picture Com-

Mr.^.I. H. Caldwell, appearing for Wiiliam Pelzer,
General Film Company, Thomas A. Edison,
Inc., Kalcm Company, Inc., Melics Manufac¬
turing Company, Patlie Freres, Frank L. Dyer,

1550 Frank L. Dyer, Direct Examination.

Mr. Henry Melville, attorney for George Kleine,
Essanay Film Manufacturing Company, Selig
Polyscope, George K. Spoor and W. N. Selig.

Mr. James J. Allen, appearing for Vitagraph
Company of America, and Albert E. Smith.

Mr. Caldwell: I want to note on the record the
withdrawal of my firm as counsel or attorneys for
Gaston Melies and the Melies Manufacturing Com¬
pany.

I will call Mr. Frank I.. Dyer.

Thereupon, FRANK L. DYER, the next witness called
hy defendants, of lawful age, duly sworn, deposed:

Direct examination by Mr. Caldwell:

Q. Where do you live, Mr. Dyer, and in what business
are you engaged? A. I live at Montclair, New Jersey, and
am President of the General Film Company.

Q. How long have you been the President of the Gen-
end Film Company? A. Since December, 1912.

Q. And prior to December, 1912, in what business were
you engaged? A. To July, 1908, I acted as general counsel
for Mr, Edison, and in addition my time was almost entire¬
ly occupied ns the executive head of his various corpora¬
tions. I was President of the National Phonograph Com¬
pany, a concern that manufactured and sold phonograph
records and also sold phonographs; I was general manager
of the Edison Phonograph Works, a concern that manu¬
factured Edison phonographs; I was Vice-President of the
Edison Manufacturing Company, a concern that manufac¬
tured and sold moving picture films and sold Edison Kinet-
oscopes, which were made by the Edison Phonograph
Works, and which also manufactured and sold Edison
primary batteries. I was President of the Edison Busi¬
ness Phonograph Company, a concern that sold Edison
business phonographs, which were made by the Edison
Phonograph Works. I was President of the Bates Manu¬
facturing Company, a concern that sold the Bates Number¬
ing Machine made by the Edison Phonograph Works. I
was Vice-President of the Edison Storage Battery Com¬
pany, a concern that manufactured and sold Edison Storage

4/ 0

Frank L. Dyer, Direct Examination.

Mr. Guosvbnok: Of what?

The Witness: Director of the Edison Portland Cement
Company, a concern that manufactured and sold Edison
Portland cement. I was a Director of several of the
foreign corporations, whose names I do not now recall, and
had the executive management of the various concerns
which sold Edison products in Great Britain, France, Ger¬
many, Australia and Argentine. I was President of the
Motion Picture Patents Company from December, 190S, to
November, 1912, and I have been a Director of the General
Film Company since its formation.

By Mr. Caldwell:

Q. Now, prior to 1908, in what business were you en¬
gaged? A. I was general counsel for Mr. Edison, from
April, 1903, to July, 1908, and organized at the Edison
Laboratory, a well equipped legal department that had
charge of Mr. Edison’s patents and legal work.

Q. At what time was the Edison Manufacturing Com¬
pany succeeded by the Thomas A. Edison Company, Incor¬
porated? A. I think it was March 1st, 1912, but it may
have been March 1st, 1911, that, at my suggestion the
name of the National Phonograph Company was changed to
Thomas A. Edison, Incorporated, and at that time the Na¬
tional Phonograph Company acquired the property of the
Edison Manufacturing Company, the Bates Manufacturing
Company and the Edison Business Phonograph Company.

Q. You were President, were you not, also, of the Thomas
A. Edison Company, Incorporated? , A. Yes, I was Presi¬
dent of the Thomas A. Edison Company, Incorporated, from
tlie time its name was changed until I resigned.

Q. And one of the principal businesses of that company
was the motion picture business, was it not? A. No. The
principal business of the Thomas A. Edison Company, In¬
corporated—

Q. (interrupting): 1 said one of the principal busi¬
nesses? A. The principal business of the Thomas' A. Edison
Company, Incorporated,’ whs the handling of Edison phono-

1552 Frank L. Dyer, Direct Examination.

graphs. That business was probably as large as the. entire
moving picture business of the country, but the business of
handling moving picture dims was an important part of
its business.

Q. Prior to 1903, you were cngnged actively in the prac¬
tice of patent law, were you not? A. I was.

Q. Hnve yon ever made any particular study of the in¬
dustrial arts in connection with your work as a patent at¬
torney? A. Yes, I have always been interested in me¬
chanical matters. I am a member, or rather, tin associate
member of the American Society of Mechanical Engineers,
my membership in that society being based on my work as
an inventor.

Q. What connection, if any; did you have with the
business end of the motion picture business after yon went
with Mr. Edison, in 1008, and up to the time when you left
him? A. T had the executive charge of the motion picture
business, and kept pretty close track- of it Of course, my
work was very general. I was quite familiar with the manu¬
facturing operations and frequently visited the studio.

Q. You had occasion also to frequently visit and inspect
the so-called manufacturing plant at which the positives
were printed? A. Oh, yes; I was entirely familiar, with the
plant, and frequently went to it, and was consulted about
changes that were made from time to time, and enlarge¬
ments of the plant. We also changed the process of develop-’
ing, while T was connected with Mr. Edison’s companies.

Primarily, the developing was carried , out on drums, and
later the so-called ruck system was introduced.

Q. In your capacity as Vice-President of the company,
and subsequently, President of the Edison Manufacturing
Company, having general supervision of the business of the
company, were you to some extent familiar with the opera¬
tions of your competitors? A. Yes. I have visited, the
plants of a good many of our competitors, both the licensed
manufacturers and the independent .manufacturers, and, r
know generally that the manufacturing operations nre about,
the same in all. the plants I hnve visited. I think the Edison W?

plant- represented a very good development of the-art, ;

Frank L. Dyer, Direct Examination, 1553

The Witness: By "plant” I would include the studio,
and also, in the case of the Edison Company, the part of
the factory that was devoted to printing and developing
operations.

By Mr. Caldwell:

Q. State what suits were brought by Mr. Edison or the
Edison Manufacturing Company on the patents owned by
him pertaining to the motion pioture art, at any time prior
to January 1st, 1909. You may commence, if yon will, with
the original Letters Patent issued in 1897, was it not, cover¬
ing the camera and film? A. Yes. When the original
patent was granted in 1897, suit was commenced against
the American Mutoscope & Biograpli Company, now called
the Biograph Company, and that suit was very vigorously
prosecuted. It was brought on to final hearing before
Judge Wheeler, and Judge Wheeler handed down an opin¬
ion sustaining the patent and holding it to be infringed,
both as to the claims on the camera and on the film. On
appeal to the Circuit Court of Appeals the Court held that
the claims were too broad; and therefore, the patent, was
reissued in two parts, one covering the camera, and the
other, the film. Suits were also brought on the original
patent, as I remember, against the Vitagrapli Company of
America, Eberhard Schneider, and, I think, Lubin, of Phila¬
delphia. My recollection is that an injunction was secured
under the original patent against the Vitagrapli Company,
and, I think also, against Eherlinrd Schneider.

Mr. Grosvenor: Can you give any dates pertain¬
ing to these suits, relating to the suits, ns you are
testifying very generally, as I understand?

Mr. Caldwell: We will follow this up later with
the specific dates.

The Witness. I am not able to give exact dates, Mr.
Grosvenor. I know that the decisions of Judge Wheeler,
and of .the Circuit Court of Appeals, are printed in the :
Federal Beporter, but I do not remember the dates.

Mr. Grosvenor: They have already been intro¬
duced in evidence.

1554 Frank L. Dyer, Direct Examination.

1 The Witness: I didn’t know that.

Mr. Grosvenor: Can’t you give the dates in re¬
spect to these other matters you hare testified to, for
instance, these injunctions you have named in those
suits?

The Witness: No, I am not alile to, except that it was
subsequent to the granting of the original patent and be¬
fore the final granting of the reissued patent.

2 By Mr. Caldwell :

Q. That would be then, approximately, between 1807
and. 1902? A. Yes. After the first two reissued patents
were granted, suits were again brought against, the Bio¬
graph Company, and I think also against the Vitagraph
Company, Lnbin, Selig, Melies, and perhaps others.

Q. How about the Pathe Cinematograph Co., and J. A.

Beret, or was there a suit brought against them? A. I don’t
recall that, but I think so. The suit against the Biogrnph
Company on the camera patent was pressed ns vigorously
8 as possible, and that suit was brought on for final hearing
before Judge Bay, who held that while the claims were
valid, they were not infringed. On appeal to the Circuit
Court of Appeals, the Court held that certain claims of
the camera reissue pntent were infringed by the so-called
Warwick camera, used by the Biograph Company, and, I
think, an injunction granted. Suit on the film reissue was
started, and it developed that the defense of the Biogrnph
Company would be that the reissue instead of having nar¬
rowed the claim or claims on the film, as was the intention,
actually broadened the claims. This contention was bnsed
4 on the fact that the word “equidistant,” which nppenred in
the original film patent claim, did not appear in the first
reissue patent on the film. This was a clerical error, which
was corrected by reissuing the film pntent a second time;
but it necessitated the dropping of the suits that had been 0y

brought on the first film reissue. My recollection is that
these suits, however, were renewed against the Biogrnph
Company and the other infringers on the second reissued
film patent. What, date did you want me to go lip to?

Frank L. Dyer, Direct Examination.

1555

Mr. Grosvenor: Reissued film patent or camera
patent?

The Witness: Film patent.

By Mr. Caldwell:

Q. You refer now to No. 12,192, the second reissued film
patent? A. Yes. What date did you want me to go up to?

Q. Up to the formation of the Motion Picture Patents
Company? A. With this date in mind, I am certain that
suit was brought on the second film reissue patent No. 12,-
192, against the Biograph Company, because, that suit was
being pressed in December, 190S.

Mr. Grosvenor : When was that suit brought?

The Witness: I don’t remember, I don’t recall that—
I know we were taking testimony then.

By Mr. Caldwell:

Q. Was it brought shortly after the second reissue? A.
I think so; and a suit was also brought on this second ca¬
mera patent in the Summer of 1908, against infringing
theatres, principally in Chicngo, but nothing became of
this suit.

Mr. Grosvenor: Those being brought in 1908?

The Witness: Yes, in the Summer of 1908, and nothing
became of this suit, because, about that time it seemed rea¬
sonably certain that the' differences between the two con¬
tending interests would be composed, as subsequently was
the case, resulting in the formation of the Motion Picture
Patents Company.

By Mr. Caldwell:

■ Q. Have you stated the result of the second suit against
the Biograph Compnny on the- reissue letters patent affect¬
ing the camera? A. The result of that suit, ns I recall,
was the granting of an injunction, enjoining the Biograph
Company from using the Warwick camera, which was a

3650 Frank L. Dyer, Direct Examination.

positive feed camera of the type now universally used,
and which is known generally as the Edison camera. I
might say, concerning this camera reissue patent, that a
motion for a preliminary injunction was argued against the
Selig Company in the Fall of 1907, and an injunction
granted, or at least, we were in position to take an injunc¬
tion, and I think an injunction was also granted against
Lubin, in Philadelphia, on the camera reissue.

Q. Is it not a fact that Judge Kohlsant of the United
States Circuit Court in Chicago, handed down an opinion
directing the issuance of an injunction against Selig? A.
That is so.

Q. Do you recall the date of that decision? A. I do not,
except that was in the Fall or early Winter of 1907.

Q. Had proceedings for an accounting been commenced
against the Biograph Company after the decision of the
United States Circuit Court of Appeals early in 1907? A.
Yes, these proceedings were being gone ahead with, and, as
I remember, were in charge of Mr. Bull.

Q. Were they pending at the time of . the settlement of
the so-called warfare between the Edison and the Biograph
interests? A. Yes.

Q. Do you recall what happened in the suit that you
brought against Luhin under the second camera re-issue?
A. Not specifically, except that as I remember it, we either
had an injunction against Lnbin or were in a position to
take an injunction.

3Ir. Grosvenor: May I interrupt with a question?
Mr. Caldwell, do T understand that, yon are going to
submit a list or memorandum witli dates respecting
all this?

Sir. Caldwell : We expeet to do that. yes.

Mr. Grosvbnor: I suggest that before you ex¬
amine the witness in these matters, that you have
that list ready, so that lie can refresh his recollec¬
tion and we can proceed more intelligently.

Mr. Caldwell: That is a question of the order
of proof. I think that it would be convenient to
have that list ready, hut it does not happen to be
ready at the present time.

Mr. GnosvENOn : I am afraid this testimony is
going to be somewhat misleading if it is going to be

Frank L. Dyer, Direct Examination. 1557

given by these general conclusions and if the wit¬
ness has not anything before him to refresh liis recol¬
lection.

Mr. Caldwell : I do not think so. I do not think
the witness will bo intentionally misleading.

Q. Now', I think you have stated that suits were brought
against Ebcrhard Schneider and the Vitagraph Company
and Melies, Pathe Cinematograph Company and J. A. Berst.
Do you know what happened in those suits? What the re¬
sult of them was? A. Are you speaking now of the re-is¬
sue?

Q. The re-issue. A. Those suits were held up pending
the determination of the Biograph suit, except as I have
stated, tile motion for preliminary injunction against
Selig and possibly also, against Dubin.

Q. After the decision of the United States Court of
Appeals, the second decision in the Biograph case, which,
ns you have stated, was followed by the decision of Judge
Kohlsant in Chicago, holding that the so-called Lumiere
and Selig cameras were also infringements of the Edison
camera, what happened?

Mr. Gbosvenor : I object to this testimony so far
as it purports to give the conclusions or opinions of
the Court, the proper evidence being those opinions;
and then, I further object to this last question ns
in my opinion, he is stating tlmt the witness 1ms
testified to certain tilings, which it is my under¬
standing he has not testified to thus far.

Sir. Caldwell: The principal opinion to which
I refer, you have already introduced in evidence.
Tlie opinion of Judge Kohlsnnt is, however, not in
evidence as yet. We will put it in.

By Mr. Caldwell:

Q. Well, what happened in the Fall of 1907, or Winter
of 1907 and 1908, Mr. Dyer? A. With the successful ter¬
mination of the litigation in favor of the Edison camera,
patent, which was held to cover all existing practical mo¬
tion picture cameras —

1558

Frank L. Dyer, Direct Examination.

1550

Mr. Grosvenor (interrupting) : I object to tliia
as being merely tbe statement of the conclusion of
the witness as to what the decision did hold, and,
therefore, as being improper.

Tbe Witness (continuing) : And since these cameras
were being used by all the American manufacturers who
had, during the Edison-Biograpli litigation, developed their
enterprises, they realised that their position was pre-

Mr. Grosvenor (interrupting) : I object to that
ns improper, stating what other people realised, and
then giving the reason as in his judgment

By Mr. Caldwell:

Q. Is that the result of conversations that you had with
the manufacturers, Mr. Dyer? A. Yes.

Mr. Grosvenor: Then, call the manufacturers to
testify as to the reasons that actuated them.

Mr. Caldwell: I think it is competent for the
witness to testify to general conditions prevailing
at the time, as the result of which, certain action
was taken.

Mr. Grosvenor: He 1ms not qualified to testi¬
fy as to what motives may have actuated others. I
■ want to enter my objection. Now, proceed, witness.

The Witness (continuing): Because all the American
manufacturers realized that the Edison Company would be
successful, as it was in the case of the Selig Company, in'
enjoining them from the use of their cameras, and, there- •
fore, from making motion pictures in the United States,
therefore, all the American manufacturers, with the ex¬
ception of the Biograph Company, came to the Edison
Company and received licenses under the Edison camera
and film re-issues to permit them to lawfully carry' on
their business. These licenses were granted in the early
part of 1908.

Mr. Grosvenor : Test suit of what?

Mr. Caldwell : On the camera.

Mr. Grosvenor : Which suit are you referring to
against the Biograpli Company?

Mr. Caldwell : I am referring to the second suit.

A. Well, in the first place, the Biogrnph Company al¬
ready had been sued under the original patents, and we
felt that it was up to us to test the re-issue patents in the
second suit against them, and not give up in our efforts to
enforce the rights of the Edison Company. Then, there
was also more or less personal feeling between the two con¬
cerns, a feeling of bitterness, but principally as a matter
of legal tactics, the suit against the Biograph Company
was selected os the test case, because the Biograph Com¬
pany was making use of two cameras, one known as the
Biograpli camera, and the other, the Warwick camera.
There was some doubt as to the infringement of the Bio¬
graph camera, but we felt that we ought to proceed against
both, and then, if we were successful, there would be no
difficulty in getting preliminary injunctions against other
infringers. Or, if we were successful only on the Warwick
camera, as was actually the case, we still could get pre¬
liminary injunctions against other infringers. If, however,
suit had been brought against any other infringers, while
we would have been successful in securing an injunction,
yet, if we then went against the , Biograpli Company, the
question of the infringement of the Biograph, camera would ‘
- have to be gone all over again, and we considered that it
was therefore better to proceed with the suit against the
Biograph Company than against the others; in other words,
it was the most unfavorable suit.

Q. Was the Biograpli Company on active competitor of
the Edison Manufacturing Company at that time? A. Yes.

Q. Anil' its largest competitor among the domestic pro¬
ducers of- motion pictures? A. It was.

Q. And did that fact have anything to do with your

1560 Frank L. Dyer, Direct Examination.

selection of that case as the test case? A. Yes. That was
also a consideration.

Q. Now, what were the considerations that led Mr. Edi¬
son to conclude to license these infringers under his patents
instead of stopping them altogether?

Mr. GROSVHNOit: I object to this .question as being
improper in asking as to the reasons that actuated
a third person and not the person testifying. The
proper way is to call the person respecting whom
the question is asked.

Mr. Caldwell: This witness at that time was
the active representative of Mr. Edison, who conduct¬
ed these operations.

Mr. Grosvenor: He is qualified to testify the
reasons that may have actuated himself in giving ad¬
vice, but certainly he is not qualified to testify as
to Mr. Edison.

Q. These licenses
from Mr. Edison, wei
being fully explained

rare issued pursuant to instructions
they not, Mr. Dyer? A. Yes. After
to him and having been approved by

The stenographer repeats the question as follows:

Q. Now, what were the considerations that led Mr.
Edison to conclude to license these infringers under his
patents instead of stopping them altogether? A. Mr. Edi¬
son wanted, to make as much money as possible out of his
patents) and therefore, by these licenses —

Mr. Caldwell (interrupting) : Before you pro¬
ceed, Mr. Dyer— these patents at that time were
owned by the Edison Manufacturing Company, were.
. they not?

Frank L. Dyer, Direct Examination; 1561

By Mr. Caldwell : ' 1

Q. That was a corporation, wasn’t it? A. That was a
corporation, owned practically by Mr. Edison.

Q. And you were the Vice-President of that corporation,
were yon not? A. I was.

Q. And practically charged with the executive manage¬
ment of Hint company? A. Not at that time. I was gen¬
eral counsel.

Q. You were Vice-President of the company? A, Not at
that time. I was the Vice-President, in July, 1908. At that
time, I was the general counsel ndvisiug with Mr. Gilmore, 2
who was the Vice-President.

Q. Yon may proceed. A. Mr. Edison —

Q. (interrupting) : By Mr. Edison, you mean now the
Edison Manufacturing Company, do you not? A. Yes. The
Edison Manufacturing Company whs practically Mr. Edi¬
son, because he owned nil the stock, or substantially all the
stock, of it — wanted to make ns much money as possible
out of his patents. He felt this could be done only by li¬
censing concerns to use the patents upon the payment of
royalties. It was also felt by the Edison Manufacturing
Company that the concerns that were in business and that 3
were infringing, had probably entered the field without a
proper knowledge of the patent situation, ai>d that it would
be harsh and oppressive to force them to retire. Further¬
more, the Edison Manufacturing Company did not have
the faciliHes to supply the market for motion picture films
at that time, and if the company had pressed its advantage
to its ultimate conclusion, it could not have supplied the
motion pictures that it would drive out. These, I think,
were the principal reasons why it was decided to license in¬
fringers instead of trying to close them up.

Q. Did those who were licensed comprise all ot those 4
engaged in business at that time, with two exceptions? A.

Yes. All the manufacturers were licensed except the Bio¬
graph Company, and the only outsider was Mr. Kleine, who
was an importer of films, and who allied himself with the
Biograph interests.

Q. One of the witnesses called by the petitioner in this
case, Mr. Swaab, has testified that in 190S, and prior there¬
to, the films were not sold as patented articles. . Is that
statement correct so far as the films sold by Mr. Edison or

1503 Frank L. Dyer, Direct Examination.

1 tlio Edison Manufacturing Company are concerned? A. No,
it is not correct, The Edison films were stated to be pat¬
ented, and, I think, the date of the patent was printed as
part of tlie main title of eacli film, so that the patent date
would be thrown on the screen when the film was project¬
ed. I am quite sure also that the fact that the film was
patented was extensively advertised by the Edison Manu¬
facturing Company and also, that the fact that the film
was patented was also marked on the boxes containing
them. I think this information was disseminated ns widely
as possible by the Edison Company.

3 Q. State what part, if any, you took in bringing about
the so-called Edison license arrangement in 1008? With
what manufacturers you conferred, if any, before the li¬
cense agreement was put in the form in which it was final¬
ly executed. A. The first knowledge . I had specifically of
any proposition to grant licenses was early in 1908. Mr.
Alexander T. Moore, at that time manager of the ICinet-
ograph department of the Edison Manufacturing Com¬
pany, came into my office at Orange, and handed me a pro¬
posed license agreement between the Edison Company and
Patlie Frores, and asked me to look it over and advise him

3 if it was correct in form. I took up this agreement with
Mr. Gilmore, who at that- time was Vice-President of the
Ellison Company, and thereafter the license agreement was
developed by Mr. Gilmore and myself. I do not recall what
the exact form of the first agreement was that Mr. Moore
submitted to me, or what suggestions in the final agree¬
ment were made by Sir. Gilmore, or what by myself. We
wanted to get an agreement that would be acceptable to
Patlie Freres, because that concern was a dominating factor
in the motion picture business at that time.

4 Q. Commercially, you mean? A. Commercially. And
we felt that the contract that would be accepted by Patlie
Freres would be acceptable to the other proposed licensees.
This work took place in the early part of 1908, and the
agreements were executed, ns I remember, in the Spring of
that year. The only manufacturer that I recall talking
with at the time when the form of the contract was being
discussed, was Mr. Berst. I think I also: saw some of the
manufacturers at the time the agreements were executed
by them, but I do not recall anyone specifically, except Mr.

Frank L. Dyer, Direct Examination. 1503

Spoor, who I remember very well coming down to New York 1
ft for the purpose of executing liis license agreement.

Q. You have stated that these agreements were executed
in tiie Spring of 1908. I want to call your attention to the
date of the agreement between the Edison Manufacturing
Company and the Kalein Company, which is attached to
the answer of the Edison Company in this case, and which
is in evidence as Petitioner’s Exhibit No. 92, and I ask you
to look at that date and see if that refreshes your memory
as to the time when these license agreements were executed?

A. Yes. In referring to the Spring, I had in mind, possibly
the 1st of February.

Q. What was the date of that agreement? A. The date
of this agreement is the 31st of January, 1908.

Q. That is about the time when the other agreements
were executed, was it? A. I think that is true of all the
agreements, except in the case of Patlie, and there was
delay in executing the Patlie agreement, as I remember it,
owiug to the fact that Mr. Berst stated that the actual ex¬
ecution of the agreement had to be first referred to his prin¬
cipals in Paris. He stated lie had not any doubt that
they would approve it, lint lie had to get their formal con- g
sent first, as I remember it.

Q. But in point of fact, did not Patlie Freres commence
to operate under the agreement at the same time as the
other licensees? A. He did.

Q. All of these agreements were substantially uniform,
were they not, in terms? All alike, with two exceptions?

A. Yes, sir. They were all alike, except that in the case
of the Patlie Company and in the Melies agreement, there
was either a separate agreement, or else the main agree¬
ment was modified to provide that those concerns should
be given the right to import foreign negatives from which 4
positive prints could be made, and also to import, under
certain conditions, foreign made positives. Those two con¬
cerns were the only ones of the licensees who bad foreign
_ affiliations. The Melies Manufacturing Company were not

W importing negatives, and therefore, it was not necessary

that their licenses should include this privilege.

Q. Why were all of these agreements made uniform in
character? A. As a matter of business fairness, we felt
that all the licensees should be treated alike. It was also
more convenient to use the common, form.

15G4

1565

Frank L. Dyer, Direct Examination.

Q. When yon took np with the exchanges under the Edi¬
son regime, the matter of contracts, were uniform contracts
made with each exchange? A. Yes, sir.

Q. Why did you consider that that was necessary? A.

Because it would have been an endless task to have nego¬
tiated separate agreements with a large number of ex¬
changes. It was much more convenient and ranch more
fair to treat them all alike.

Q. It is in evidence that there was a conference or con¬
vention of motion picture men, principally exchange men,
in the City of Buffalo, early in 1908. Were you present at
that conference or convention? A. I was. I went there
witli Mr. Gilmore.

Q. Will you state what transpired there, so far as yon
know? A. That was a convention of a large number of ex¬
changes. I think most of the exchange men of the country
were there ; certainly 'the most important exchange men were
there. It was a meeting, as I recall, of a body known as
the Film Service Association. At that meeting I addressed
tiie members of the Association and explained to them that
the Edison camera patent had been sustained in our suit
against the Biograph Company, and that all the American
manufacturers except the Biograpli Company had decided
to recognize the Edison patents, take licenses under them,
and pay royalties to the Edison Company, and that those
licenses were subject to certain reasonable conditions. I
stated that up to that time the exchanges, in handling film
that had not been licensed under the Edison patents, had
infringed those patents just ns effectively as if they had
made the film themselves, and that it was the purpose of
the Edison Company to license exchanges under the Edison
patents, so that they could handle licensed films legitimately
and without danger of infringement. And at that time I
read or explained the provisions of the proposed exchange
license to the several exchanges, so that they would un¬
derstand it. I also had several of the exchange men come
np to me afterwards and ask questions about the proposed
exchange license, and I endeavored to make it clear to them I?

what it was designed to cover.

Q. Was any objection made, so far ns you recall, ns
to the terms of the exchange license? A. No. The exchange '

men seemed to be very hopeful that, as a result of the cessa¬
tion of the warfare between the conflicting interests and

Frank L. Dyer, Direct Examination.

the licensing of the industry, that conditions would irn-
# prove, so far as their business was concerned. I think that

they generally approved the exchange license, and I do not
recall that any of them objected to it.

Q. Did any of them express any fear that the exchnnge
business, if conducted under the conditions that had been
prevailing theretofore — that it would not last long? A.
That feeling seemed to be in the atmosphere.

Q. Do you recall, Mr. Dyer, a provision in the license
exchnnge agreement between the Motion Picture Patents
Company and the exchange, by which the exchnnge is ob¬
ligated to lease a minimum of twenty-five hundred dollars’
worth of film per month? Do you know what the origin
of that provision was? A. Yes, I think the origin of that
prevision was one of the rules of the Film Service Associa¬
tion that the exchanges had imposed upon themselves, pro¬
viding that no exchange should be a member of the Asso¬
ciation unless it purchased twelve hundred dollars’ worth
of film per month.

Q. I call your attention to Petitioner’s Exhibit No. 2,
page 527 of the record, which is Article II of the by-laws
of tiie Film Service Association, and ask you to read Sec¬
tions 2 and 3 of those by-laws, and see if that is what you
are referring to ns the self-imposed condition by the ex¬
change men.

Mr. Grosvbnor: I object to all this ns immaterial.

A. Yes, sir. The two sections rend ns follows:

“Section 2. For the purpose of membership in
this Association a ‘legitimate film-renting business’
shall be . one equipped to do a self-sustaining film-
renting business independent of any other office or .
concern, that purchases new film for renting pur¬
poses to the average amount of at least $1,200 per
month.

'w) “Section 3. Any eligible individual, partnership

or corporation desiring to become a member of this
Association shall sign a written application for mem¬
bership, stating the name' and office address of the
applicant, the names of the partners, the names of
tiie officers or directors, if a corporation, and the

1506

Frank L. Dyer, Direct Examination.

1567

name of the person who will represent the member¬
ship in the Association in the case of a partnership 0

or corporation, that in how many, if any, moving
picture shows the applicant is interested, either di¬
rectly or indirectly, and the names under which they
are operated, and whether the applicant will, if
elected to membership, give a pledge not to rent film
to any person or persons whom the applicant knows
to be re-renting it.”

This is the lmsis of my previous answer.

Ily Mr. Caldwell:

Q. After the formation of the Patents Company, the
minimum requirement was changed from $1,200 to $2,500,
was it not? A. Yes, sir.

Q. And can you assign any reason why the minimum
was increased under tiie Patents Company licensing ar¬
rangement? A. My recollection is that this increase was
made at the suggestion and request, of tiie exchange men
themselves, who represented to ns that at that time the
exchange that did a smaller business than $2,500 per month
in the purchase of films, would not be self-sustaining, and
therefore, would he open to the teriiptation of objectionable
practices, particularly duping, which was a common prac¬
tice at that time. I know that there were at least three
good sized duping plants in Chicago, Philadelphia and San
Francisco, that I was informed were doing a prosperous
business. Duping was a great vice.

Q. Could an exchange satisfactorily serve its custo¬
mers if it took less than that amount of film per month? A.

I do not think so.

Q. Did the Edison Manufacturing Company, or, as far
as you know, any other manufacturer, have nnything to do
with the preparation of tiie by-laws of the Film Service
Association? A. No, sir.

Q. Was the Edison Company a member of the Film Serv- ry

ice' Association? A. No, sir.

Q. Do you know whether any of the other mnnufac- ,
turers were members? A. I don’t know personally, but
there were some manufacturers, namely, the Vitagrapli
Company, Babin, and Spoor, who were interested in the

exchange business, and it is probable that those manufac-
0 turers or individuals connected with them, were members of

the Association. I am quite sure that Mr. Rock was a mem¬
ber of the Association, representing the Vitagrapli Com¬
pany. I would like to say, however, that the Vitagrapli
Company of America, which is essentially a producing con¬
cern, was different from the American Vitagrapli Company,
which was the exchange concern. They were two corpora¬
tions, but the trade frequently confused them.

Mr. Grosvbnor: They were owned by the same
people?

The Witness: By practically the same people, yes, sir.
By Mr. Caldwell: ■

Q. Mr. Swanson, a witness called on behalf of the
Government, lias testified that all of the manufacturers
were members. Then that statement is inaccurate? A.
Absolutely.

Q. I show you Petitioner’s Exhibit No. 92, introduced
in evidence on page 368 of the record, but not copied in
the record, but identified ns the exhibit attached to the
answer of Thomas A. Edison, Incorporated, and the same
being the license agreement between the Edison Manufac¬
turing Company and the Knlem Company, dated January
31st, 1908. Do you identify that as one of several similar
agreements executed between the Edison Manufacturing
Company on the one side, and certain other persons ns li¬
censees? A. Yes, sir.

Q. With what other persons were similar agreements en¬
tered into at or about that time? A. S. Lubin of Phila¬
delphia, later known as the Lubin Manufacturing Company;
the Essanay Company of Chicago, Selig Polyscope Com¬
pany of Chicago, Pathe Freres, the Vitagrapli Company; and
George and Gaston Melies. In the case of the Pathe and
a Melies licenses, they were the same, except that they pro-

. vided. us I have before explained, for the importation of

foreign negatives and the printing of positives in this coun¬
try, but whether this clinnge was in the agreement itself
or the subject of a supplemental agreement, I do not now

1508 Frank L. Dyer, Direct Examination.

Q. At tlie time these agreements were entered into, the
Edison Manufacturing Company, the licensor, was itself Q

actively engaged in the production of motion pictures, was
it not? A. Yes, it was one of the largest producers.

Q. And was it in active competition with these seven
persons and corporations that you have just named? A.

Yes, sir. Did I name seven? Did I have all of them?

Q. I think you have named seven. And after the execu¬
tion of these agreements, it continued in the business of
manufacturing motion pictures, did it not? A. Oh, yes.

Q. And in active competition with the seven licensees?

A. Yes, it was in active competition and developing all the

Q. So that at. the time these agreements were executed,
the Edison Company sustained a dual relation, did it not, to
the subject matter of these agreements? A. Yes.

Q. What was that relation? A. The Edison Company, in
the first place, was the owner of the dominating patents and
occupied the position of the licensor with respect to the
several licensees, and also was a manufacturer or producer of
motion pictures, and therefore occupied the relation of com¬
petitor with its own licensees.

Q. Did all of these agreements subject the licensor, that
is to say, the Edison Manufacturing Company, to the same
terms and conditions ns the licensees? A. All except the
payment of royalties.

Q. The value of a license to manufacture and sell under
a patent depends, in a large measure, does it not, on the
exclusiveness of the rights that are conferred, or, in other
words, the number of licenses to bo issued under the patent?

A. I think so. I think that is the general experience of
patentees.

Q. In negotiating the terms and conditions of these li- ■
censes with the various persons who' subsequently became li¬
censees, do you know what, if anything, was said by any of
them as to the number of licenses' that were to be issued?

Mr. Grosvhnor : Are you talking about the rental . O’

exchange licenses or the manufacturers’ licenses?

Mr. Caldwell: I am speaking of the manufac¬
turers’ licenses.

Mr. GnosvBNon: And this was prior to the for-

Frank L. Dyer, Direct Examination. 1509

mation of the Patents Company, and related to the
$ period of the Edison licensees, so for?

Mr. Caldwell : Exactly.

Mr. GuosvENOn: Thank you.

The Witness: Yes, sir; the idea was to confine the li¬
censes to those producers of motion pictures who were then,
in business, or at least those whom we knew of, and not to
extend the number ns new concerns entered the business,
unless the licensees agreed to it, or a majority of the licen¬
sees.

Q., Do you know whether a license was offered to the
Biograph Company and to George Kleine at that time? A.
Yes, sir, we offered a license to the Biograph Company, but
they refused to be licensed.

Q. Then the disposition of the Edison Company at that
time was to license the entire art ns it was then known, or
as it then existed? A. That is what we planned to do.

Q. But you could not agree with the Biograph Company
and George Kleine as to the amount of royalty to be paid, is
that correct? A. That is the reason why they did not ac¬
cept the licenses from the Edison Company.

Q. Do you know whether or not any of the persons or
corporations who entered into these license agreements with
the Edison Company, contemplated at the time making addi¬
tional investments in their business nfter obtaining licenses?

Mr. Gbosvenou : I object to that as immaterial.

A. Yes. I recall very well that after the licenses were
finally executed and the strain and stress was over, that
several of the licensees, notably the Vitagrapli Company, Mr.
Lubin, Mr. Selig, and Mr. Spoor, told me that they now felt
. that they were in position to go ahead with safety and invest
cupital in their business, so as to develop and greatly im¬
prove the character and tone of their pictures. The impres-
■ sion I got from them was that they had not made any more

W investments than were absolutely necessary, because of the

fear they had of losing their investment as the result of
patent suits.

Q. I call your attention to the provision contained in
Paragraph 20 of the exhibit which- 1 have already shown
yon. You may state what provision there was in that para-

Frank L. Dyer, Direct Examination.

1571

grnpli ns to tlie number of licenses which might he issued
under the patents nnd under what conditions additional
licenses might he issued. A. The paragraph in question
which appeared in all the other license agreements, provides
that in addition to the license of the Edison Company and
Kalem Company, six other similar licenses might he granted,
making a total of eight.

Q. A total of eight licenses, or a total of eight manu-
fncturers under the license, including the licensor?. A.
Making a total of seven licensees, and one licensor. The
agreement provides that additional licenses might he granted
by a plurality vote of the licensor nnd licensees, based on the
running feet of new subjects issued by the licensor and
licensees during the year preceding the taking of the vote.
Tlie paragraph also provides that in case of the termination
of any license, tlie licensor should hnve a right to appoint a
now licensee in place of the one that was ended.

Q. Why were the licensees granted a voice in determin¬
ing whether or not additional licenses might he granted?

Mr. Grosvbnor: This questioning refers not to
the Patents Company licenses, then?

Tlie Witness: No. These v

■c the Edison licenses.

■ Mr. Grosvbnor: Thank yon.

The Witness : By the grant of these several licenses, tlie
patent property or territory was divided practically into
eight parts, eacli manufacturer having one-eighth. Just exact¬
ly the same as in the case of an exclusive license, tlie one
licensee has the whole. Therefore, to grant an additional
license or licenses, would reduce the interest of each licensee.
Tlie licensees agreed to pay substantial royalties under the;
patents, based upon a certain understanding, namely, that
the number of licenses should be limited, and it seemed
entirely reasonable to me at the time and does so now, that
they should have a right to decide whether additional licenses
should be granted. I doubt very much if they would have
consented to pay the royalties they did if they had felt that
the Edison Company could indiscriminately license nnyone
who might appear in the field.

0 •

Frank L. Dyer, Direct Examination.

Q. Was there much discussion or controversy over the
question as to the amount of royal ty to be paid between tlie
Edison Company and tlie licensees, prior to tlie agreement?
A. Oil, yes.

Q. Before they arrived at an agreement? A. Oh, yes, that
was the result of considerable dickering hack nnd forth. We
were trying to get as much as we could, nnd the licensees
were trying to pay as little ns they could. That always hap¬
pens with license agreements.

Q. I call your attention to the following provision con¬
tained in Paragraph 4 of that license agreement, namely :
"That the licensor and licensee will use exclusively sensi¬
tized film approximately 1% of an inch or 35 millimeters in
width, or narrower, manufactured nnd sold in the United
States under authority from the licensor, nnd called in that
license agreement licensed film, and that they will not pur¬
chase or otherwise acquire or sell or otherwise dispose of or
deal in motion pictures produced on or by the use of any
other film than such licensed film, nor sell nor otherwise
dispose of any negative motion pictures.” What was the
purpose of limiting the licensees to the use of film 1% inches
or narrower? A. That was the standard width of motion
picture film, namely, 35 millimeters, and we were dealing
with the practical existing conditions at the time. The pro¬
vision regarding the use of narrower film was put in the
licenses because several of the licensees were discussing the
possibility of putting out a small household machine, and
we wanted the license to include the handling of film for
this purpose. The Patlie Company and the Edison Company
ns a matter of fact did, at a later date, put out machines of
that type, using film of a less width than 35 millimeters.

Q. It was never intended* or contemplated, however, that
the so-called household machine should ever give exhibitions
for profit; was it? A. No. The household machine was
siiiiply a refined form of toy. It was to be used only in the
homes. Something like a phonograph.

Mr. Cai-dwki.i, : i think this might be a conven¬
ient time to stop. I would like to examine Air. Dyer
on another subject now that I would not like to break

Mr. Grosvbnor:

had better have a little longer

Frank L. Dyer, Direct Examination.

session this afternoon then. We have lost about
twenty minutes out of the two hours.

The Examiner: Shall we meet again at 2 o’clock.
Mr. Caldwell : '2 :30, the usual time.

The Examiner: The hearing is adjourned until
2:30 o’clock this afternoon at the same place.

New York City, November 10th, 1913.

The hearings were resumed, pursuant to adjournment, at
2:30 o’clock P. M., November 10th, 1913, at aianhattan
Hotel, New York City. .

The appearances were the same as at the morning session.

Thereupon FRANK L. DYER resumed the stand.

Direct examination continued by air. Caldwell :

Q. air. Dyer, you have stated that the Edison films were
sold as patented articles both prior and subsequent to the
Edison licensing arrangement in 1908. I show yon a blue
label with the following printed on the back of it: “Edison
Clear Projecting Film. Subject.” Followed by some blank
lines on which to place the title of the picture. “Length. ...
Feet,” which is followed by this printing: “This film is made
and sold under the Edison Patent No. 589,108, dated August
81 1907. Imitation or duplication thereof will be prosecuted.
Manufactured by Edison Mfg. Co., Orange, N. J., U. S. A.,”
and I ask you if that is one of the labels that was in common
use in the sale of the Edison film prior to the time of the re¬
issue of the film patent? A. Yes. I recall seeing film boxes
containing this label at or about the time I moved down to
Orange, in April, 1903— possibly it was before that time,
because I spent a good deal of my time at the Edison Labora-

- Mr. Caldwell : I offer it in evidence.

Mr. GnosvnNon : I want to ask one or two questions
before I decide whether I will make objection. This
small round disk names only Edison Patent No. 589,-
168, dated August 31, 1897. Then, I suppose, this

Frank L. Dyer, Direct Examination. 1573

label was used before the decision of Judge Wallace
on that patent, which I have named, and before the
reissue, for the reuson that no reissues are named on
this label?

The Witness : It was used apparently before the reissue,
and after the date of ,tbe patent. The patent mentioned on
the label is the original patent.

Mt. Gbosvenor : Yes, but it does not state the num¬
bers of the reissues, or refer to the reissues, therefore
it is to be presumed the label was used during a period
• antedating the issue of the reissues?

Mr. Caldwell: That was my question.

The label offered is received in evidence and
larked “Defendants’ Exhibit No. 105. E. H.”

EDISON CLEAR PROJECTING FILM.
Subject

Length . Feet.

This Film is made and sold under the Edison patent
No. 589,168, dated August 31, 1897.
Imitation or duplication thereof
will be prosecuted.

Manufactured by

By Mr. Caldwell: .

Q. I show you another label with red printed matter on
the back, rending as follows: “Trade Mark. Thomas A.

1574.

Frank L. Dyer, Direct Examination.

1575

Edison. Patented August 31, 1897. Eeissued Sept. 30, 1902.

Eeissued Jan. 12, 1904. No.... Length.... Feet. Title,” Q

•with a space for the title of the subject, followed by this
printed matter: “Notice. This film is sold subject to the re¬
striction that it shall not be used for duplicating, or printing
other films from it. Any use of it for such purposes is an in¬
fringement of the above patents under which it is made and
sold. Manufactured by Edison Mfg. Co., Orange, N. J.,

D. S. A.,” and I ask you if that is a form of label that was
used on all motion pictures sold by the Edison Manufactur¬
ing Company subsequent to the dates of the reissued letters
patent referred to on the face of it, and up to the time of the
Edison .licensing arrangement in January, 1908? A. Yes; ns
I recali, this is a label that was being used in connection
with what was called “Class A Film.”

Mr. Cacdweli. : We offer that label in evidence.

The label offered is received in evidence and
marked “Defendants’ Exhibit No. 106. E. H.”

Defendants’ Exhibit No. 106. E. H.

Trade Mark
THOMAS A. EDISON
Patented August 31, 1897.

Eeissued Sept. 30, 1902. Eeissued Jan. 12, 1904.

No . . . Length . Ft.

Title . . . .

NOTICE

This film is sold subject to the restriction that it shall not be
used for duplicating or printing other films from it.
Any use of it for such purposes is an infringe¬
ment of the above patents under which
it is made and sold.

/ ' Manufactured by

EDISON MFG. CO., .

Orange, N. J.,

U. S. A. ,

By Mr. Caldwell:

® Q. Referring again, Mr. Dyer, to Petitioner’s Exhibit No.;

92, dated January 31, 1908, and to the provision contained
in paragraph 4, which provided that licensees should get their
raw stock from the manufacturer named by the licensor.
What was the purpose of confining the licensee to the use
of raw film manufactured and sold in the United States
by a person or persons authorized by the licensor? A. The'
purpose of this particular provision is this: The Edison
Company, as I have stated, in addition to being the owner
of the patents, and the licensor, was also the producer of
moving pictures, and, therefore, a competitor of the licensees.
The licensees were very jealous, apparently, of their busi¬
ness, and objected to the Edison Company, as a competitor,
knowing how much business they were doing. Therefore, the
provision was made that the royalties should be collected by
the licensed manufacturer of raw film from the several li¬
censees, and turned over to the Edison Company in bulk,
without divulging the amount that might be contributed by .
any individual licensee. Furthermore, the Eastman Kodak
Company, that was designated as the licensed raw film man¬
ufacturer, was the manufacturer of the best film available,
and we desired to have licensed pictures put out on the best
possible film so ns to gradually improve the condition of
the business The principal reason, however, waB to devise a
scheme by which the royalties could be collected without
divulging the amount contributed by each licensee.

Q. Did the Edison Company as the owner of the patents
have any special interest in the selection of a high grade of
raw stock? Did it have a separate interest there ns dis¬
tinguished from its interest as a manufacturer, and as the
owner of the patents? A. Naturally that is so, because onr
idea was to try to develop the business on a high plane so
that it would be prosperous, and become larger, and so that
the royalties would therefore be greater.

Q. What was the purpose of the prohibition contained
a in that license agreement against the sale of negative mo-

* turn pictures? A. Is that in the same paragraph?

Q. I think it is. Would the fact that the royalty was
based both on the amount of the film used in the negatives,
as well ns in positives, have any relation to that prohibition?
A. I think that is so. As I recnll, the purpose of this pro-

1576

Frank L. Dyer, Direct Examination.

liibition was to prevent a licensee, who had legally manu¬
factured a negative under the license, from disposing of that
negative to some one on the outside who might produce posi¬
tive prints therefrom without paying a royalty. We con¬
sidered it desirable in granting licenses to tie the camera and
film patents together, and prevent any possibility of the
licensees in any way rendering support to any outside in¬
fringers.

Mr. Ghosvenou : • In using that term “film patent”
in that sentence just read, are you referring to the
patent Eastman had?

The Witness: No, I am referring to the Edison reissue
film patent.

By Mr. Caldwell:

Q. Is that all you wanted to say on that subject? A. Do
you wish me to elaborate?

Q. No, I simply wanted to know whether you had finished
your answer? A. Yes.

Q. I call your attention to the following provision in the
same paragraph of this agreement: “The Licensor cove¬
nants and agrees, upon the execution of this agreement, to
furnish the licensee with the name or names of the manu¬
facturer, or manufacturers of such ‘Licensed Film’ from
whom the Licensor and Licensee shall purchase the same,
and the Licensor agrees also to keep the Licensee promptly
informed hereafter, from time to time, of the name or names
of any other or, additional manufacturer or manufacturers
authorized by the Licensor to make such ‘Licensed Film’ and
from whom the same may he purchased.”

Q. What name or names of manufacturers of raw film
did the licensor give to the licensees after the execution of
this agreement? A. The Eastman Kodak Company.

Q. Why was the Eastman Kodak Company selected? A.
It was known that the Eastman Kodak Company would be
selected because all the licensees were dealing with that
company and getting film from it. The Eastman Company
made the highest type of film then known, so that the quality
of the pictures would thereby be assured, and, at the same
time, the Eastman Kodak Company was a large and respon-

Frank L. Dyer, Direct Examination.: 1577

sible concern, and every one, both the licensor and the 11-
$ censeos, felt confident that the confidence required by the

license would be observed by the Eastman Company. The
Eastman Company, of course, was not specially referred to
in the license because we did not know wlmt the future would
develop, and every one felt, of course, that if a new film
should appear that was superior to the Eastman film, that
such film ought to be placed at the disposal of the licensees.

Q. Was the Edison Company in any way interested other
than as you have already stated in the Eastman Kodak Com¬
pany? A. Not at all.

Q. Was it the intent of the agreement to give the East¬
man Kodak Company a monopoly of supplying raw stock?
A. No.

Q. Now, I call your attention to another provision con¬
tained in the third clause of paragraph i of that agreement,
to the effect that the licensor will exact from each manu¬
facturer of raw film authorized by it to furnish or sell such
film to the licensees, an agreement in writing not to furnish
such motion picture film to anyone but the licensor and its
licensees — do you find that there? A. Well, it is a little dif¬
ferent — '

Q. (interrupting) I am not pretending to quote the exact
language. A. Yes —

Q. — Except to the extent of 2 Vf> per cent of the total
amount of licensed film of the width of 1% inches, or nar¬
rower, supplied by such manufacturer to the licensor
and said licensees during any one year, which amount the
manufacturer was authorized to sell to persons not engaged
in the motion picture business, with the further exception
tlint the manufacturer might reserve the right to manufac¬
ture and sell sensitized films suitable for commercial pro¬
duction of negative and positive motion pictures of a width
not to exceed approximately three-quarters of an inch to
persons engaged in the motion picture business. What was
the purpose of prohibiting the manufacturer from selling
film of tlic standard width to persons other than the lieen-
♦ sees? A. Any licensed film that might be sold in this coun¬

try by a licensed manufacturer of raw film for moving picture
work would necessarily be used in an infringing camera, and
the manufacturer would therefore be contributing to the
infringement.. The purpose of the condition was to minimize

1578 Frank L. Dyer, Direct Examination.

1 as much ns possible infringements of tlie Edison patents. In

a sense it amounted to a license to the raw film manufacturer “

under the Edison patents, or, in other words, a license against
contributory infringement. My recollection is that this par¬
ticular provision later on was modified, or, at least, was
not observed by the Eastman Compnny.

Q. In negotiating your contract with the Eastman Com¬
pany was it pointed out, do yon know, to the Enstinan Com¬
pany that if they sold this raw film to any persons other
than the Edison licensees the Eastman Company itself would
be a contributory infringer of the patents of the Edison

2 Company?

Mr. Guosvenor : Objected to as hearsay.

Tlie Witness: Yes, that point was fully explained to the
Eastman Company.

By Mr. Caldwell :

Q. Yon have staled that, one of the purposes was to
minimise or lessen tlie danger of infringement. To what

3 extent, if any, do you think it had that result in actual op¬
eration? A. I am not able to say, but I think during the
time the condition was observed it reduced infringements to
some extent.

Q. Did you state why tlie exception was made in this
restriction . to the extent of two and one-half per cent, of the
raw film sold by the Eastman Company? A. Yes, 1 re¬
member that tills point was brought up by Mr. Enstinan
when we were discussing with him the advisability of this ■
condition. He stated that to his knowledge there were a
number of people in the United States who were taking up .

4 the moving picture work, more or less in an amateur way,

for the purpose of taking pictures of subjects of natural
history, etc., and lie mentioned a friend of bis in the Yellow¬
stone Park, who was making moving picture records show¬
ing the habits of wild animals. He stated he thought it fif)

would be for the public good to allow this work to go on .

even if it was an infringement; mid therefore, this excep¬
tion was made, leaving it to the Edison Compnny to stop
those infringements if it saw fit to do so.

Q. Why was the manufacturer of sensitized film . left

\ , ■ff;

Frank L. Dyer, Direct Examination. 1570

free to sell film three-fourths of an incli in width or less to 1
persons engaged in the motion picture business other than
the licensor or licensee? A. That had to do with the pro¬
posed household or toy machines which it was thought
might be made, and all of which would use film of the
narrower width. We were dealing in these agreements
with the standard film that had developed in the art, and.
could not very well tell what the development would be iu
other lines.

Q. I call your attention to the covenant contained in
Paragraph 5— if you will refer to that— not to “sell, or
otherwise dispose of, or offer for sale in the territory afore- 4
said, unexposed positive or negative licensed film during
the continuance of this agreement.” What was the pur¬
pose of this provision? A. The purpose of that condition
was to prevent licensees from securing the film and selling
it to an infringer. I do not think there was any objec¬
tion to one licensee selling film to another licensee, which
apparently would be covered by the condition, although
that might have been something that we objected to. *

Q. Explain what is meant by the use of “blank film”
for “leaders,” or “spacing,” ns the term is used in this g

paragraph? A. At the front of each picture is placed
a section of blank or colored or tinted film, to take up
the wear which is greatest at the end. A similar piece of
blank film is used at the finish of the picture and it is
called a “tail-piece.” Ordinarily when two or more pictures
are combined in a single reel they are separated by a few
feet of blank film. Of course, any tough, flexible, perforated
material, such as paper or cloth, might be used for these
purposes, but there is a great deal of waste in connection ,
with the production of these pictures, both at the studios,
and in connection with the manufacturing operations, so 4
that there is always a supply of blank filin' for these pur¬
poses.

Q.' What was the purpose of the prohibition against tlie
’ sale of second-hand positive or negative motion pictures,

0 or motion pictures which have become used, or shopworn';

or in any way damaged? A. The purpose of that condi¬
tion was to minimize the extent, to which old worn out ob¬
jectionable pictures might appear in the art. It was along
the same lines as the condition requiring the return of
film after a certain period of use. We felt that it would be

15S0

Frank L. Dyer, Direct Examination.

Frank D. Dyer, Direct Examina

1581

just ns objectionable to permit the licensee to sell old and
worn out film as it would he to permit the exchanges to
retain old and worn out film tor use in service. It would
he difficult to place an exact point at which a second-hand
picture might be objectionable, or not, so that the provi¬
sion prohibited all second-hand pictures from being sold by
the licensees.

Q. At the time of this licensing agreement in Janunry,
1908, was the use of old and worn out dim quite common,
in the business? A. Tes, they were very common. The
moving picture art had developed so. rapidly that the de¬
mand was greater than the supply, so that the pictures were
subjected to terrifle use, and many of them were very old
and worn. These were called in the art “rainstorms,”
which were quite common. Pictures of this sort were used
generally in vaudeville houses as chasers to drive out
audiences, and allow new people to come in. We felt sure
that pictures of this sort would simply do harm to the
business, and we had reason to believe that they were actu¬
ally ■harmful to the eye. As a result of the conditions of
this license agreement and subsequent license agreements
relating to the return of old and worn ont film, and pro¬
hibiting the sale of second-hand film, the condition of the
motion picture art has been very greatly improved, and I
doubt if any motion picture theatre now would put up for
a moment with the objectionable lilms that were quite
common in the art at the time the agreement was made.

Q. What is the meaning of the term “non-lieensed mo¬
tion pictures,” as it is used in that agreement? A. A non-
licensed motion picture is one produced or imported by
anyone not licensed under the Edison patents.

Q. Now, I want to call your attention to Paragraph G
of that agreement, which reads in parts as follows: “The
licensor and licensee further mutually covenant and agree
not to loan, rent out, sell, or offer for sale or otherwise
dispose of in the territory aforesaid, motion pictures to
anyone purchasing or otherwise obtaining, using, loaning,
renting or selling, or offering for sale or otherwise dis¬
posing of or dealing in non-licensed motion pictures.” Wlint
was the purpose to be subserved in prohibiting licensees
from selling to persons dealing in noh-licensed motion pic¬
tures? A. The purpose was to keep the licensees from giv¬
ing aid, comfort and support to infringers. We felt that

if the licensees could supply film to infringers, they would
thereby support infringers and give them better opportunity
to carry on and extend their infringing operations.

Q. When you say, “we felt,” you mean that the licensor
felt? A. The Edison Company.

Q Do yon think that the agreement produced that re¬
sult in whole or in part in its practical operation? A. I do.

1 think it minced infringement.

Q. It was a provision at least tending to secure the patent
owner in the exclusive enjoyment of his rights under the
patent, is that right? A. That was the purpose of it.

Q. Deferring now to Paragraph 9 of this agreement,
which establishes a schedule of minimum prices, will you
please state the reasons which actuated the licensor and
licensees in fixing a minimum schedule?

Hr. Ghosvenor: It is understood, I take it, that
the objections heretofore made will apply to all this
line of testimony, that these questions are all imma¬
terial—

Mr. Caldwell (interrupting) : I have not heard
that objection before.

Mr. GnosvENOii: I think I have mnde it.

Mr. Caldwell: Yon can put it on the record if you
want to.

Mr. GROSVenor : I will state it again, then, in order
that there may be no question, that I object to all this
line of testimony as to reasons or motives that mny
have actuated any of these people in doing any of the
acts, on the ground that these are immaterial. The
motives are immaterial — whether the witness is asked

to testify in regard to the motives that actuated them

in making the agreements of January, 1908, or in re¬
gard to the motives which actuated them in making
subsequent agreements, or any of the agreements in
this case.

Mr. Caldwell: Inmnswer to that I will say that
we are charged in the petition with having executed
these various agreements with the motive of suppress- .
ing competition, and restricting competition, and es¬
tablishing a monopoly. If the purpose which actuated
the defendant in entering into these agreements is
material as charged in the petition, it is clearly com-

Frank L. Dser, Direct Examination.

15S3

1582 Frank L. Dyer, Direct Examination.

potent tor ns to bring out the real motive which did
actuate them.

Mr. Grosvbnor : That question lias not yet arisen,
because all the testimony today, and all the questions
so tar addressed to the witness, relate to the agree¬
ments of January, 1908, which, ns X recall the petition,
are not even referred to in the petition; therefore my
objection so far made is not contrary to anything set
out in the petition regarding the purposes.

Mr. Caldwell : The agreements of January, 1908,
were the forerunners of the agreements of December,
1908, and I propose to connect the two in such a way
as to make this testimony entirely admissible.

Mr. Grosvbnor: All right; go ahead. I want my
objection on the record.

By Mr. Caldwell :

Q. Will you answer the question? A. There were several
reasons why a minimum price was established. We felt that
the motion picture art had great possibilities. In the early
davs, up practically to the time of the granting of these li¬
censes, and even to a large extent at that time, most of the
films used- were exhibited largely because of their novelty.
Some of these films simply showed little incidents and scenes,
such as Niagara Falls, the American flag, the Empire State
Express, waves washing the shore, and so forth. Some films
had been made that were more or less dramatic, like the
“Great Train Robbery” of the Edison Company, and a pic¬
ture called “Personal” by the Biograph Company. Those
were probably the two best known pictures ever made up to
that. time. We felt that the art could progress along the
lines of the drama, removing the motion picture from its field
merely as an ephemeral novelty, to a standard form of amuse¬
ment,’ and we believed that the competition between the pro¬
ducers should therefore extend along the line of quality of
production, and not on price. So that a producer of these
pictures, knowing what he could get per foot, would be able
to put the greatest possible value in each foot or subject.
The art has progressed since the grunting of these licenses
to a very remarkable extent, and is now no longer merely a
novel form of entertainment, that appeals to people because
of its novelty, lint is an assured and established form of

amusement, its popularity being probably greater than any
other form of amusement in the world. In addition, a very
important reason for providing for a minimum schedule,
as I recall, ivas the fact that the Edison Company occupied
the dual relation of licensor and competitor, and it was felt,
and the fear was expressed by the licensees, that if the Edi¬
son Company should receive a large income annually in the
form of royalties, they would be placed at an unfair advan¬
tage in competing with the licensees. Therefore a minimum
price was fixed, which was designed to represent a fair aver¬
age of prices then current, so that any such unfairness on
the part of the Edison Company, should it choose to take ad¬
vantage of its position, might be checked. I . do not recall
any others. I may think of something later.

Q. Did the establishment of that minimum schedule have
any effect on the price of admission paid to motion pictures?
Did it raise the price of admission to motion pictures in any
wav? A. No, not at all. The usual price of admission then,
and at the present time, is five cents. In some localities the
price is ten cents or more where the theatres are very large,
or where the program is so long that the audience cannot be
changed often, but the price at that time and now, or at least
the usual price, is the minimum American standard of five
cents, and that price could not be reduced, no matter how
much cheaper the pictures might be made, any more than
could the price of soda water or beer be reduced if the cost of
production is lessened.

Q. Was it believed by the licensor that the royalty which
it was to receive would ultimately be greater if a minimum
schedule were established, than it would be if no restriction
were placed upon the licensees as to prices? A. Yes, it was
felt that unless this and other conditions were imposed that
tended to promote tiie eventual development of the business,
the royally would be less than if there were no conditions.
We, felt that— I said “we;” I mean the Edison Company—
that by trying to do everything that we could within the
territory of our patents to elevate the business and make it

i schedule was binding upon the Edison

Frank L. Dyer, Direct Examination.

1 its position as a producer of motion pictures is concerned,
to all the conditions and stipulations of the license agree¬
ments, except the payment of the royalty.

Q. Was each manufacturer left free to charge what he
pleased for his product, so long as it was not below the
minimum schedule? A. Yes, sir.

Q. Was there any agreement or understanding between
the manufacturers on that question, outside of the written
agreements? A. No, sir.

Q. I think you have stated that the minimum price fixed
in this schedule fairly represented the average of the price

2 prevailing nt the time the agreement was made. Is that cor¬
rect? A. That is as I recall it, yes, sir. Some of the pro¬
ducers were selling at a lower price and others above this,
but I think this was a fair average.

Q. Why did this paragraph of the agreement provide that
a new minimum scale of prices might be adopted by a plu¬
rality vote of the licensor and licensees, based upon the out¬
put, 1,000 feet of new subjects, placed on sale in the territory
covered by the agreement? A. No one would be able to say
that a fair, reasonable price established at the time of these
agreements might be fair and reasonable under different

3 conditions. We felt the conditions might change, as, for
example, substantial reductions in the price of raw material,
which would permit a lower price in the finished picture, or
increase in the investment, or increase in the salaries of
actors, or increase in the character of the pictures required
by the public, that would necessitate an advance of the mini¬
mum price. Therefore, since the minimum price could not
be fixed immutably for all time, it is recognized that it
should be subject to change when conditions required it. The
licensees being competitors, of the Edison Company, would

. not permit the Edison Company arbitrarily to change the
price, because the Edison Company had a clear advantage
of two or three hundred thousand dollars annually in roy¬
alties, which would enable them to fix a price that would be
unfair to the licensees. It was felt therefore that the licen¬
sees should participate in the consideration of a change in
price, and it was felt that the vote representing the relative
size of the several licensees would be a fair way to determine
that question. When I say relative size; I do not mean that
the relative size of the licensees would be the same at all
times as was the case when the license was issued, because

1585

Frank I* Dyer, Direct Examination.

the particular manner of taking the vote was of such a char-
<£j actcr that under competitive conditions, the licensees might

grow or be reduced in size, and their vote would correspond¬
ingly be changed. The idea was to provide a voting scheme
that would take into account cliunges in the size of the'
manufacturers under the stress of competition.

Q. And those chnuges in size actually did take place,
did they not? A. They did, in a very interesting way. For
instance, when the Edison licensees were first formed, the
Kalem Company had just been started, and it was such a
small factor in the business, that we debated seriously
whether we should recognize them and license them, but they
were licensed, and since the grant of this license, the Kalem
Company has developed in a very remarkable way in size and
in the character of its pictures, so that at the present time it
stands among the first four of the licensed manufacturers.
In tlie case of the Essanay Company, the situation was about
the same. They were a small, unimportant concern, that
we thought a license might be refused to without particular
injustice, but they were licensed, and have developed so that
. they are a very large, powerful concern now. On the other
hand, the Patlie Company at that time was the predominant
factor of tlie licensed interests, making much more film than
anybody else —

Q. (interrupting) : You mean importing much more film
than anybody else? A. Putting out. Importing und putting
out much more film than anybody else, and apparently set¬
ting a standard for all of us to follow, und under competi¬
tive conditions, the Patlie people have been pulled down
from the top, and instead of using sixty per cent of foreign
film as was the case in the early days, we are using only
about ten per cent. And there has been change in the rela-
' tive position of the Edison Company, and change in the po¬
sition of the Lubin Company. In fact, there lias been a
gradual shifting up and down of tlie several concerns that
started out under the Edison licenses from that time to this.
All dne to the efforts on tlie part of each to excel the other
% and to try to get up above their competitors if they could.

' Q. What is meant by the term “new subjects placed on
sale” as it is used in that paragraph? A. That means the
negative footage of released subjects; in other words, if a
manufacturer or producer was releasing four subjects a
week of a thousand feet each, that would be four thousand

158fi

Frank D. Dyer, Direct Examination.

1587

1 feet, so far as the vote was concerned, whether ten copies of

each subject were disposed of, or fifty copies, as I remember Q)

it.

Q. What is the meaning of the term “standing order,”
which we find in Paragraph 10 of this agreement, and
what was the purpose of the requirement timt a standing
order should remain in force for not less than thirty con¬
secutive days? A. A standing order was an order placed
for one or more prints of each subject released by the li¬
censee. It was exactly like the subscription to a maga¬
zine, except that it could he cancelled on thirty days’ no-

2 tice. It provided for the continuous supply of pictures of
that particular make under the order. It required some
time to print up a number of copies from a single negative,
and, therefore, it was necessary that time should be given
to a manufacturer in cancelling a standing order, because
if a manufacturer found himself with one or more prints on
his hands that he had printed up under the belief that the
standing order still stood, he would have difficulty in get¬
ting rid of them.

Q. Why were sales for export not covered by the agree¬
ment? A. Because the patents did not extend beyond the
■ territory of the United States, we felt that we could not
impose conditions on export sales. Of course, the films were
produced in the United States, and therefore paid royalty,
but what happened to them after they left the United States
we had no control over.

Q. What was the purpose of the provision in Paragraph
12 as to special motion pictures, where it was agreed be¬
tween the- manufacturer and the person ordering the same,
that the negative should be the exclusive property of the
person ordering it, and positive prints to be mnile from
4 time to time by the licensees on the order of such person,
the price being fixed at ?1 per running foot for making
' the negative, and not less than fifteen cents per running
foot for the positive printed from it? A. These special
motion pictures were something outside of and apart from
the regular business. It amounted to a very snmll part of *3)

the business, and, I think, still amounts to a very small
part of tiie business. They were pictures that were made
at the request of some outsider for a special. purpose.

Q. By “outsider” yon mean someone not engaged at all
in the motion picture business in nny of its plmses? A.

Yes. For instance, the City of New York might want to
(A have a picture taken showing the Street Cleaning Depart¬

ment. The Navy Department might want a picture taken,
showing what a very pleasant life the American sailor
leads. Manufacturers require pictures showing operations,
for the purpose of impressing their customers. The Na¬
tional Cash Register Company has hail a great many mo¬
tion pictures made to illustrate questions of salesmanship.
’These were special pictures, the negatives being the prop¬
erty of the person or corporation for whom the picture was
made. I remember the Southern Pacific Railroad Company
had pictures mode showing the development of the Texas
lands. And there were quite a good many of them, but in
the aggregate, compared to the amusement side of the busi¬
ness, they amounted to very little. The reason these par¬
ticular conditions were imposed, was the same as in con¬
nection with the minimum price, the Edison Compnny being
a competitor, could have gone out after this particular busi¬
ness and secured all of it at prices tlmt the other licensees
could not possibly have met, and it was felt that the price
of a dollar per foot was reasonable. That, would be only
$500 for a five hundred fdot. subject, which would involve
sending a man and a camera and an outfit, generally arc
lamps, and so forth, sometimes to quite distant points. The
price of fifteen cents was made higher than for the regular
amusement pictures because generally not more than two
or three copies were printed from these special negatives.
But this part of the business was nlmost inconsequential.

Q. I call your attention to the provision contained in
Paragraph 17 of this same agreement: “No sale except for
export shall be made except under certain terms and condi¬
tions, one of which is that the purchaser shall return to
the licensor or licensee, as the case m«y be, from time to
time, such positive motion pictures that have been pur¬
chased, on the first day of every month, beginning with
August 1st, 1908, an amount of positive motion pictures in
running feet not purchased over, six months before, and
of the make of the licensor or licensee, ns the case may lie,
to whom it is returned, equal to the amount that was so
purchased during the sixth month preceding the date of
such return.” And I ask you what was the purpose of this

requirement of the return of film? A. The purpose of this
. condition was to require the return of old, worn-out nnd

1588 Frank L. Dyer, Direct Exasiination.

eye-impairing film, the idea being to improve the character _

of the exhibitions. As I recall, this particular condition
was not imposed or was not insisted upon or carried out by
the Edison Company, under its license agreements, but was
later on embodied in the agreements with the Patents Com¬
pany, and carried out by that company. The effect ot the
condition was to largely reduce the number of these objec¬
tionable films and improve the quality of the exhibition,
and as the result of this improvement, our competitors, in
order to meet our competition, are required to give ex¬
hibitions of films in equally good condition. The “rain¬
storms” that I spoke of in the previous answer, wore bring¬
ing about a condition of disrepute, so that many people
who saw motion pictures only in the vaudeville shows,
looked upon them as very tedious and objectionable, in fact,
in the old days, generally, the moment a motion picture ap¬
peared, everybody began to scramble out.

Q. Was it intended by this provision in any way to
limit tlie quantity of film in circulation? A. No.

Q. Or to create an artificial market, or demand for more
film? A. No. The reason was to improve the character of
the exhibitions by removing these very objectionable films
from the market.

Q. In fact, did this return of film have any effect what¬
ever on the supply of new film? A. I do not- think so. I
think that the conditions of this business are such that the
film is passed through certain regular well-defined channels,
and when they have passed through those channels, and
have served their purpose, their usefulness has practically
ended, and they might come back without detriment to any- •
one; in other words, there is a definite track over which the
films pass. They start out at one end and come out at
the other end, and when they come out at the rear end of
the track, they have practically served their usefulness and
further uses would only be to injure the public and injure
tlie art.

Q. Now, viewing the question from the standpoint of the
owner of the patent strictly, and not his interest as a pro- W

ducer of motion pictures, was this restriction as to the re¬
turn of film of advantage to the patent owner? A. Yes. It
was of advantage to the patent owner in the same respect
that all these conditions were of advantage to the patent
owner, namely, to improve the tone of the business, improve

Frank L. Dyer, Direct Examination. 1589

the character of the business, change it from a side show
ft proposition to a high-class theatrical proposition. That do-

■ velopment has actually taken place. The very development

that we expected and predicted. At the time the Edison
licenses were made, almost the only theatres in existence
were the small store shows. It was generally one room with
some battered chairs in it, and a screen at one end, and the
projecting machine at the other. The exhibition was given
in absolute darkness. The place was badly ventilated, ex¬
tremely dangerous in case of fire, and being in absolute
darkness, terrible complaints of all kinds of immoral prac¬
tices were made; in fnct, tlie ordinary motion picture place
was looked upon almost as a house of assignation. By im¬
proving the character of the films, we have been able to culti¬
vate the interest of cultured and refined people in them, so
that tlie tone of the entire audience has improved, and as a
result of that improvement, the reaction lias necessarily
benefited the owners of the patents.

Q. Was it believed that it tended to increase the revenues
which he would ultimately derive from his royalties under
the patents? A. Certainly. That is what I intended to Bay
in few words.

Q. Could you say what percentage of any of the film
returned to the manufacturer after tlie expiration of tlie
six months was fit for further use for exhibition purposes?
A. No, I could not. With a proposition involving thou¬
sands of films, it is impossible to lay down any fixed definite
rule concerning each one. You will have to deal with general
rules, and the general rule is that a film that is six or seven
months old is pretty well worn out. Creditable exhibitions
cannot be given with it. Of course, in actual practice, films
are sometimes returned that are not worn out. They are
returned because tlie public will not permit their exhibition.
Becently with our company, we had a film that was put out
that was of an advertising nature, and tlie theatres refused
to run it because they refused to advertise the goods of any- '
, one. Then sometimes a film will be worn out very quickly •

•ft) because it is very popular, and will be subjected to the

greatest amount of usage in the first two or three months. ,
That kind of a film would be returned. And sometimes we
are unfortunate enough to have a film ruined the first week
or the first day or the first time it is run through the ma¬
chine, due to the imperfect operation of the projecting ma-;

1590 Frank L. Dyer, Direct Examination.

Frank L. Dyer, Direct Examination. 1591

1 chine, or the stupidity of some operator, and such a film ns
that is returned,— so that it is impossible to have nny fixed
rule that applies to all films, but taking the question from
all angles, I think that it can be said that the average film
that has been run under average conditions six to seven
months is worn out and ought to be returned.

Q. And that had been the actual experience of the Edison
Company ns a producer of motion pictures nt the time this
agreement was made? A. Yes, sir. We wanted to give the
films their full measure of life, but get them back before

o they did harm.

2 Q. Paragraph 7 provides that the licensor and licensee
shall mark conspicuously on the labels which shall be placed
on the boxes or packages containing motion pictures, certain
terms and conditions of sale, which labels were to be headed
ns follows: “Licensed motion pictures patented in the
United States, August 80th, 1897, reissued January 12th,
1904. The enclosed motion picture is sold upon the following
terms and conditions.” Then follow four, conditions under
which the picture is sold, the first of which is that the pur¬
chaser shall not re-sell the same, but shall have only the

„ right to use it in giving motion picture exhibitions or to rent
it out. Do- you know in point of fact whether the labels on
the boxes containing motion pictures manufactured and
sold by the licensees and the licensor and required to he so
marked, were, in point of fact, so marked, in accordance with
the printed conditions required by this paragraph? A. So
far as I know, that is so. It was certainly so in the case of
the Edison Company and I believe it was so with the other
licensees, because we saw that they received these labels,
and I have occasion to see a good many pictures put out by
tlie other licensees, and they all contain this label on the box.

4 . Of course, I was quite interested in this particular proposi¬
tion, and would have noticed if the label bad not been on
the box.

Q. In Paragraph 18 the licensor and licensee covenant
that they will not dispose of the motion pictures by lonning
them or renting them to others, nor use them for the purpose
of giving exhibitions thereof for profit. What was tlie pur¬
pose to be subserved by that covenant? A. The reason for
tlie restriction or condition against loaning or' renting films
to others was to prevent tlie licensees from avoiding the
other condition of the license relating to the minimum price,

in other. words, the- licensee might interest itself in one or 1
Q, more exchanges, and lend or rent its films to that exchange

: at a low price. That is my present recollection of this par¬

ticular condition. The restriction regarding exhibitions by
the licensees had to do, I think, with preventing licensees
from going into the exhibition business. As I recall, the
exchanges witli which we dealt at that time were fearful
that the manufacturers might take up tlie exhibition busi¬
ness, and I think this condition was designed to prevent the
manufacturers from interesting themselves in the theatres.

• Q. And did that covenant have some relation to the
amount of royalties to be paid ultimately under the patents? *
A. In the same sense that all the conditions had, that we
wanted to impose conditions that would result in tlie satis¬
factory development of the business, and as the result of
the prosperity which we thought would come to licensees
under proper conditions, the Edison Company would re¬
ceive a larger amount of royalty.

Q. Most of the provisions to which I have particularly
called your attention in the Edison license agreements, were
subsequently incorporated in tlie license agreements made
by the Motion Picture Patents Company, and its ten so- g .
called manufacturers and importing licensees, which are
already in evidence in this case, is that right? A. Yes, sir.

Q. Confining your answer to sucli of the foregoing provi¬
sions as were substantially incorporated in tlie Motion Pic¬
ture Patents Company licenses, you may state whether or
not tlie purpose or purposes of including them in tlie latter
licenses were tlie snme ns was the case in tlie licenses is¬
sued by tlie Edison Manufacturing Company, having in
mind, however, the fact that tlie Motion Picture Patents
Company, the licensor under this license agreement, was
not itself engaged in the motion picture business, that is, 4
producing or manufacturing. A. All the conditions or the
reasons for tlie conditions were the same in the case of the
Patents Company as with tlie former Edison licenses, and
■■ all of the reasons which impelled the licensees to protect

Qr £) themselves from unfair treatment on the part of the Edi¬
son Company as a competitor, were doubly present in the
cuse of the . Patents Company, in view of tlie fact that the >
Patents Company was owned by two competitors, namely, •
the Edison Company and the Biograph Company.

Q. You were President of the Motion Picture Patents

Frank L. Dyer, Direct Examination.

Frank L. Dyer, Direct Examina

1593

Company, were you not, from its organization up to about
December, 1912? A. I was President from December 18th,
1908, until X resigned in December, 1912.

Q. Then you were President at the time when all of
these license agreements were executed in Deecmbr of 1998?
A. I was.

Q. What was the reason which induced the Patents Com¬
pany, instead of authorizing the sale of these motion pic¬
tures, to restrict it to a lease? A. That was done as a re¬
sult of our experiences under the Edison licenses. So far
as the exchanges were concerned, it made no difference,
because under the Edison licenses, there was a conditional
sale with the return of the film at the end of six months,
while under the Patents Company licenses, there was a
lease for the return of the film at the end of seven months;
in other words, the Patents Company license in terms of
percentage was sixteen and two-thirds per cent, more favor¬
able than the Edison license. The main purpose of pro¬
viding tor a lease instead of a sale was to more effective¬
ly prevent infringement. Under the Edison licenses, if a
licensed film, in violation of the conditions of the license,
was shown by an unlicensed person, it was difficult to en¬
force the agreement, because, in the first place, it was very
difficult to identify the particular copy of the subject, and
trace it back to the infringing exchange. There was no
way that we could seize it, and it would have been futile
to have brought a patent suit against the theatre, because
the film was used by the theatre only from one to two or
three days. I recall that one of the experiments we tried
was to suggest to certain of the manufacturers to put-
private marks on ench copy of a picture, so that they
would be able' to tell when the picture was thrown on the
screen to whom it was sold, and thereby trace it back to
the infringing exchange. This was an expensive process,
because it meant putting a certain individual mark on
each print, and a considerable amount of bookkeeping in
keeping track of them, and I do not recall that anything
came of this suggestion, but by providing for the lease of
the films, which did not affect in one iota the rights of the
exchanges or their free use of the film in exactly the same
way that they had used them under the Edison licenses, we
were able in case of a violation of the license to seize the
films by replevin suits, or rather, the individual manufac¬

turers were able to do that, and a good many of these
replevin suits were successfully carried out in the case or
the violation of the licenses by infringing theatres. Also
another reason that impelled us to change to the lease was
that in <piitc a number of States there are unfavorable laws
on the subject of conditional sales, and we felt that we
might involve ourselves in difficult problems if we con¬
tinued the former plan of selling the films conditionally.
This change did not in any way prejudice the exchange, and
it was of very great help to us in enforcing our legitimate
patent rights.

Q. By unfavorable laws in many of the States, do you
refer to the laws of States like Pennsylvania, for instance,
where a conditional sale of a chattel, that is to say, a sale
with a reservation of title in the vendor, is not recognized?
A. Yes. We had run afoul of those laws in handling the
Edison business phonograph on the instalment plan. I
thiuk there were similar laws in the State of Ohio.

Q. Did you find also, that it was difficult to enforce the
requirement of the provision in your license as to the re¬
turn of film after six months, where title had passed? A.
Yes. We did not, as I said before, have any of the film
returned under the Edison licenses, but —

Q. (interrupting) : You were confronted with that dif¬
ficulty? A. We were confronted with that difficulty, and
a good many exchange men in talking with me, expressed
the opinion that, having bought the films, they thought they
ought to be allowed to keep them, and not be required to
return them. And I think if we had gone on under that
arrangement, we would undoubtedly have confronted dif¬
ficulty with a good many exchange people who did not seem
to appreciate what a conditional Bale was.

Q. Wlmt was the purpose of incorporating in the Mo¬
tion Picture Patents Company exchange license agreement,
the paragraph reserving to the Patents Company the right
to cancel the license on fourteen days’ notice? A. There
were a good many reasons for this. There was no way, or,
at least, there did not seem to be any way, to bind the ex¬
changes irrevocably to the Patents Company, and compel
them to always remain licensees, and deal in licensed films.
They always reserved the right to renounce the license when¬
ever they saw fit. to do so.

1B04 Frank D. Dyer, Direct Examination.

My. Grosvenor : Whom (lo yon mean l>y “they?”
The Witness: The exchanges.

By My. Caldwell:

^rsjsis^“£2»a“^

Q. The exchange did not pay any consideYation to the
Patents Company tor these licenses did s“y

ii(.Qnse -was a mere privilege and not a light, Like any
license, it was the privilege to be immune from suit dur¬
ing the existence ot the license.

By Mr. Caldwell :

O You may narrate the events that led up to the forma-.
tionQot the Patents Company. A. When the Ellison licenses
were in effect, the business resolved itself into two antagon¬
istic factions, the Edison licensees on the one hand, and the
Biograph Company and Mr. Kleine, I think, and I tin
one or two Biograph licensees, on the other. Our patent on
the camera had been sustained, and our position was theie-
55a pretty strong, and we had the Aim patent which covered
all motion picture films; while, on the other hand, the 13 o-
graph Company had patents on which it was assertin its
rights ; particularly on projecting machines. These weie

Frank L. Dyer, Direct Examination. «0o

the Imtharn patent and the Pross patent, and the Armat- 1
Jenkins patent. We were going abend with the accounting
on the camera patent, and were also pressing the suit on
the film patent against the Biograph Company, and .against
various infringers in the Biograph camp. On tom pa .
they had brought a suit against us on tlieir patents. \\ lien
I say “us,” I mean the Edison Company and its licensees. It
looked very much as if all the fighting that we : had been
g gel ever since 1898 or earlier was to stuit all ovei
again. When the Edison licenses were being granted, I
offered the Biograpli Company a license, but they refused to
takeit, and later on I saw Mr. Marvin with Mr. Kennedy,
at the suggestion, I think, of Mr. Patlie, or poBSibly Mi.
Gnmnont may have made the suggcstion,-and we discussed
the possibility of settling our suits— settling our patent dif
Acuities. Because we both realized that if the suits that
were pending should turn out successfully to the patentees,
we would simply embargo each other. We wou i d prevent
the operation of any successful camera under the canieia
patent, and we would prevent the sale or the use or any
importation of film under the film patent, and they would,
prevent the use or exhibition of any film, however made,
under the patents of the Biograph or Armat companies. Mi.
Marvin explained the case from his point oi ! t io ^ and
pointed out the importance of his patents, how valuable they
were, and thought it might be possible to have some scheme
under which we would recognize his patents, and lie would
recognize our patents, with a division of the royal hes I

asked him how much royalty he thought the 1 mgraph inter¬
ests should get, and lie said he thought, they should get half,
"allnotthinkhe should get half, because Mr. Edison’s pat-

the licenses granted, and he was getni
fifty or three hundred thousand dollars
I thought his position was rather fine
stronger than the Biograpli. Mr. Mar

Judge Hazel, and could
injunction, and the Lathi
and was valuable for tlia
were entitled to half of tl

e made the basis of preliminary
n patent had a long time to run,
reason, and he thought that they
j royalties, and I would not agree

1590 Frank L. Dyer, Direct Examtxa

and the fight' went on again. Or, 'rather, the fight still con¬
tinued, because tliis brief talk- did not stop it at all. Then a
little later, at the request of Mr. Kleine, I went up to see
him at the Republican Club. I had always known him and
liked him, and he told me that the constant fighting between
the Biograph and Edison companies, with the terrific uncer¬
tainty of the result, had put everybody up in the air, and
they did not know where they were, and ho suggested that if
we possibly could, we ought to get together and hnve some
agreement that would result in a termination of all the war¬
fare, and putting the business in a condition of quietude, so
that people could go' ahead and invest money' in their plants,
and build better theatres and develop the business. Well, I
saw Mr. Marvin and Mr. Kennedy again, I think in company
with Mr. Kleine, and we went through the same performance
that we did at our first meeting, Mr. Marvin making his
speech, and I making my speech, and he making his demand
for half of the royalties, and I refusing the demand, until it
occurred to me that if Mr. Edison could be assured that he
would get his film royalties, why, it would be possible then
to allow tlie Biograpli Company to take an equivalent
amount out of the royalties that might be collected from
other sources, and that anything remaining over should then
be divided between the two interests, because primarily my
purpose was to try to save the money that Mr. Edison was
getting under liis patents. I did not want to jeopardize that
or divide it up with anybody. This suggestion met with the
approval of Mr. Marvin and Mr. Kennedy, and then I saw
that it was possible to have an arrangement that would
bring the two concerns together. We had a talk at that
time, and I think we had several other talks about how the
thing should be done, and naturally the first suggestion was
for them to recognize our patents by taking a license under
our patents, and we to recognize their patents by taking a
license under the Biograph patents, but this seemed to be a
very difficult thing to do, and it would have to be done any¬
way by means of a combination or arrangement, so as to
divide the royalties that were to be collected, and it seemed
to us that the only proper way to do was to bring all the
patents into one holding corporation to act as a licensor,
and that would provide the various ways of collecting the
royalties, and that would collect the royalties, and that

Frank U Dyer, Direct Examination. 1597

would divide the royalties between the several patuut own¬
ers, on the basis that we had ngreedupon, and that company
was later formed and was called the Motion Picture Patents
Company.

Mr. Caldwell: It is uow half-past four, our
usual time of adjournment, mid I suggest that wo
adjourn until tomorrow, at the usual hour.

The Examiner: The hearing is adjourned until
10:30 o’clock tomorrow morning.

Whereupon, at 4:30 P. M. on this 10th day of November,
1913, the hearings are adjourned until Tuesday, the 11th day
of November, 1913, at 10 :30 A. M., at the Hotel Manhattan,
New York City.

Evidence.

1000 Frank L. Dyer, Direct Examination.

1 Thereupon FRANK L. DYER resumed the stand.
Direct examination continued by Mr. Caldwell:

Q. Mr. Dyer, in answer to my last question yesterday,
in speaking of your conference witli Mr. Marvin, you stated
that Mr. Edison was getting from two hundred and fifty
to three hundred thousand dollars a year out of licenses.
Did you mean by that he was getting that sum from his
royalties alone under his patents, or altogether, including
his profits from his producing plant? A. That is what
.2 I figured the royalties would amount to.

Q. After the formation of the Patents Company, to
what persons were licenses issued, first, licenses to produce
and to import? A. Licenses were granted to the seven
Edison licensees, and also to the Edison Company, Bio¬
graph Company, and to George Kleine.

Q. Did these persons constitute substantially all of the
persons engaged in the production and importation of mo¬
tion pictures at that time? • A. I should say a very con¬
siderable portion.

Q. Those who were not licensed, were they of any
8 importance in the art? A. No, sir.

Q. So substantially the entire art was licensed? A.
Substantially so.

Q. And to what other classes of persons were licenses
issued? A. Licenses were also issued to the manufacturers
of projecting machines, and also to exchange men who were
doing a distributing business, and finally to theatres
who might wish to show licensed film.

Q. I think it is in evidence that abont ninety-five per
cent, of the manufacturers of projecting machines were
licensed. Does that accord with your recollection? A. I
4 think fully that. I know that all of the important manu¬
facturers were licensed. And X might add that licenses
were gran ted. to other concerns who started up in business
for the manufacturing of projecting machines after the
Patents Company was formed.

Q. What was the policy of the Patents Company, in the
issuance of licenses to exchanges? A. To grant a license
to any fairly representative exchange which might wish to
he licensed. I do not recall that any license was refused

Frank L. Dyer, Direct Examination. 1(101

to an exchange at the time that the Patents Company 1
was started.

Q. Can you state why the license agreement, or the
license to George Kleine, restricted his importations to
the makes of certain European producers? A. At that
time, as I stated yesterday, the Patho Company towered
head and shoulders above the other producers, und es¬
pecially in Europe, and next to them, although considerably
smaller, was the Gaumont Company, and below the Gnu-
inont Company was a large number of small producers.

Mr. Kleine had agency contracts for a great number of
brands of films, most of which we never heard of. We ”
felt that it would be a mistake to allow these unimportant
foreign made films to enter into the programmes of the
American manufacturers, because we were fearful that it
would not add prestige to it. The Gaumont films, and the
Urban Eclipse films were good representative foreign films,
and the best of the films Mr. XCleine was importing, and
we felt that these films could properly bo introduced into
the programmes. Mi-. Kleine wns, therefore, allowed the
importation of three subjects per week, of these two films,
but, of course, he was not restricted as to the number of g

copies that he could import, and dispose of. This gave
the iiccnsed output of foreign films— as Patlie, Gaumont,
Urban Eclipse, and Melics. My recollection is that most
all, or at least many of the films that were formerly
handled by Mr. Kleine were, when he terminated his agency
for them, imported into this country by other concerns.

So that their importation into this country was not stopped,
although they were not licensed.

Q. So far as you know, did Mr. Kleine protest against
being restricted to importation of these two brands of
films? A. No. Those two brands were practically his .4
entire business.

Q. Were many of the other films imported by Mr.
IClcine of a character to reflect credit upon the art? A.

No, they were poorly and cheaply made, and many of them,
as I recall, were not the kind that would appeal to the
■ American people. AS a matter of fact, foreign films, I do
not think, at any time appealed very strongly to Americans,
because the foreign idea ,of morals is different from the
Americun idea; but a large mass of foreign films wns used
in the early days, because those were all that the Ameri-

1002 Frank L, Dver, Direct Examination.

Frank l. Dvbr, Direct Examination.

1003

1 can lmd, except the limited number of American films

that were being gradually developed. r }

Q. In refusing, then, to license these cheap films, many
of which were not up to the American standard of morals,
was the Patents Company actuated by any purpose or
desire to improve the condition of the art, and thereby in¬
crease the revenues which they might ultimately receive
under their patents? A. Yes, sir.

Q. Mr. Dyer, will you state just what the motion picture
business is, as it is conducted in this country today? A.

The motion picture business at the present time is prac-

2 tically a theatrical business, because it deals, for the most
part, with dramatic works. It makes the same appeal to
the imagination that is made by the drama. It is a new
form of intellectual appeal. It depends for its successful
accomplishment, first, upon an optical defect of the eye,
known ns the persistence of vision, and it depends, in the
second place, upon the Iranian faculty of forming mental
images when the imagination is aroused, as with litera¬
ture, paintings, music, or the drama. A moving picture
audience is like any other audience, sitting spellbound and
unconscious of its surroundings. Like the regular stage,

3 the spectator of a moving picture, experiences the feelings
and sensations of -the characters which appear on the
screen. These photographic images are just ns real to
the moving picture spectator as are the living, breathing,
actors and actresses of the regular stage. The popular
motion picture actresses are just ns ranch overwhelmed
by letters from admirers as the most popular nctresscs of
tiie regular stage, although they are known to the people
only by reason of their photographic representations.

. Mr. Ghosvbnok: That is highly interesting, but

1 I fail to see how it is relevant or material, and, there¬

fore, we make objection to it.

Mr. Caldwell : I think it very material to show
to the Court the real nature of the business coil- .

ducted by these defendants, which they are charged (_r

with restraining and monopolising.

The Examiner : Proceed, Mr. Witness.

A. (continuing) : The motion picture business, like
the theatrical business; falls naturally into three groups —

first, the producer; second, the distributor, and third, the 1
* exhibitor. In the production of a motion picture drama,

» the play is selected and prepared, in precisely the same way

as if for the regular stage, except, of course, with the
regular drama, the playwright provides the spoken words;
but in the case of pantomime there is really no difference in
the original play, except that the motion picture, because
of its greater flexibility, and greater possibilities, permits
of many more scenes, and the securing of effects that
would not even lie suggested in the case of n pantomime.
Having prepared the play, it is turned over to a director, 0
exactly as is the case with the regular drama, and that "
director gathers around him in one case, as in the other,
the body of actors selected to perform the respective parts.

In each case costumes are provided, proper scenery is
painted, and the necessary properties secured. The di¬
rector rehearses the actors so that they may become .per¬
fect in their parts, exactly as the director of a regular
stage conducts his rehearsals; and when perfection is
reached, the motion picture camera is brought out, and
the finished performance given before the camera, and a
photographic negative record taken of that performance. g
In other words, so far as the production is concerned,
the motion picture art is the same as the regular dramatic
art, except that instead of utilising the body of actors
collected by the director to go out on the road and give
their performances before the various audiences, the di¬
rector in the case of the motion picture play sees that
a photographic record of the drama is made, and copies of
this record are sent out on the road, and are exhibited in
the several theatres. The second class, or group, connected
with the motion picture business, namely, the distributor,
has its analogy in the regular theatrical business in the 4
booking office, or in the booking agency, and in the mo¬
tion picture business this distributor is called nn ex-
. change. The purpose of the exchange is to distribute the

plays among the motion picture theatres. Decause of the
4$ brevity of the motion picture, a programme usually com¬

prises three or more plays, and these programmes are
chnnged from one to seven times weekly. With the more
important pictures, which are a recent development, and
which seem to be destined to greater use in the future, pic¬
tures of the same general type as Quo Yadis — the hooking

is precisely the same as the boohing of a regular dramatic
. performance, dates being arranged in advance, and ad¬
vertised by the theatres exactly as they might advertise a
regular road show. The only difference between a dis¬
tributor, or exchange, in the motion picture business, and
the booking office, or the booking agency, in the theatrical
business, is that in one cose the distributor deals with the
photographic record of the play, while the booking agency
in the tlientrical business, deals with living, breathing
actors, and the tangible accessories of the performance,
such as scenery, costumes and properties, including in the
latter sometimes, various animals. The difference between
the moving picture business in this respect, and the theat¬
rical business, is that ' the transportation of a tlientrical
company may require one or two cal's, while the moving
picture requires a package smaller than a dress suit cnse.
So far as the third group is concerned, namely, the theatres,
one is practically the same as the other. In fact, it is
very common for motion pictures to be shown in regular .
theatres, and it is getting to be more and more common
for small plays, and vaudeville acts, to be shown in con¬
nection with motion pictures in picture houses. In fact, in
one State that I know of, Massachusetts, the law pro¬
hibits continuous exhibitions of pictures for more than
twenty minutes at a time, so that it is necessary to fill in
with vaudeville, or small plays.

The only difference between a motion picture theatre
and a regular theatre is that while a regular theatre has
a horizontal stage, upon which the actors perform, a mo¬
tion picture theatre makes use of a vertical screen, upon
which the photograhic representations of the actors are
projected; and also, a motion picture theatre is generally
smaller than a regular theatre, and more economically
run, and the price of admissions is almost invariably

Frank L. Dyer, Direct Examination. 1005

mission to motion picture theatres is less than to
other theatres.

Mr. Caldwell: But those are not necessarily
matters of which the Court would take judicial no¬
tice — we have got to prove them.

The Witness: Mr. Grosvenor might stipulate.'

The Witness: I don’t think I t

Q. Then, in point of fact, the only thing which differen¬
tiates the picture play from the regular theatrical play is
that the latter is presented by living actors, and by word
of mouth, and the former by photographic images of these
same actors? A. That is correct, and apparently the effect
on the audience is the same in the one case as in the
other. In the case of the motion picture it seems to be
a very remarkable fact that the imagination of the audience
revivifies the photographic images, and turns them into
life. Not only this, but the imagination also supplies the
perspective to the fleeting images, and also supplies color
to the black and white photographs. The incongruity of
a black and white rose never seems to uppeul to a mov¬
ing picture audience.

Q. The various mechanical devices involved in the pro¬
duction of the motion picture play are not apparent at all
to the audience, are they? A. You mean the cameras

Q. Yes, the cameras, projecting machines, and any
other mechanical devices used in the production of the
play? A. No, sir. The only thing that the audience sees
is the photographic images on the screen, apparently in
movement.

Q. The film itself is not seen? A. No, sir.

Q. Will you state what classes of persons are engaged
in the production of the motion picture play? A. The di¬
rector who — ■

Q.' (interrupting) : Isn’t there a class of persons who

1000 Frank L. Dyer, Direct Examination.

have something to do with the business or contribute to .

the business, that precedes even the director? A. Yes. Q •

First I should take the scenario writer, who prepares the
necessary play or drama ; then the director, who attends
to the rehearsing of the actors; then the actors who ap¬
pear in the play; scene painters who prepare the scenario;
carpenters who make the necessary properties; people who
have charge of the costumes and wigs; and finally, the
camera man, who actually operates the camera to take
the picture; with the usual accessories of electricians and
mechanics generally found around a studio or in a regular
theatre.

Q. What class of persons in the motion picture business
are employed in your second class that you have described,
which you have stated is analogous to the booking office or
booking agency? A. These are the exchanges. Offices that
are located at centers of distribution, in charge of a
manager who is familiar with the business, with a stock
of films that is constantly mobile, inspectors and repairers,
who are attending to the inspection and cleaning and re¬
pairing of the film, booking men, who attend to the booking
of the programs to the several customers, and the usual
office employees, who attend to the general work.

Q. While it is usual for the producer of motion pic¬
tures to have a so-called manufacturing plant ns pnrt of
his equipment, is that always a necessity? A. No, the
manufacturing operations are quite independent of and dis¬
tinct from the purely artistic work of producing the plays.

Just as the mechanical work of a regular theatrical per¬
formance is independent of the artistic part. It is quite
the common thing in this country for studios where the
artistic work is done, to he located sometimes as far ns
three thousand miles away from the manufacturing plant
where the purely manufacturing operations are performed:

And in Europe, it is quite common for companies to go no
further than to attend to the artistic work of producing the
negative, leaving the manufacturing operations to some man¬
ufacturer. The Patlie Company, in Paris, for instance, do
the printing for quite a considerable number of the pro¬
ducers, and I believe this will be the eventual develop-,
ment, or one of the developments, possibly, in this country.

I think even now there are some concerns in America who

Frank L. Dyer, Direct Examination. 100T

have no manufacturing plants, but who merely make the
negatives.

Q. Take the case of the Edison Company. Will you
state where its studio is located, and where its . so-called
factory is located? A. The main studio of the Edison
Company is at Bedford Park, Bronx, New York, and the
factory where the printing operations are performed, is at
Orange, New Jersey, about twenty miles away. The Edison
Company also maintain a studio, or did, while was con¬
nected with them, at Los Angeles, California.

Q. Can yon state the locations of the Btudio and the man¬
ufacturing plant in the case of any of the other producers?
A. Yes. In the case of the Biograph Company, the factory
and main studios are located in Now York City, but they alBo
maintain a studio at Los Angeles. In the case of the Lubin
Company, the factory and one studio are located in Phila-
• dclpliiu, but they maintain very large studios at Betawood,
about thirty miles outside of Philadelphia, and studios also
in Jacksonville and Los Angeles. The Selig plant iB in Chi¬
cago, where its main studio is also located, but the Selig
Company maintains a large studio at Los Angeles. And
the same is true of the Essanay Company, which has recently
started the production of negatives, I think, at Watkins
Glen, New York. The Patlie Company have their manufac¬
turing plant at Bound Brook, and their American studio at
Hoboken, while their main studios are in Paris.

Q. Can you state why so many of the studios are located
in Los Angeles, California? A. On account of the generally
fine weather there, and the great variety of natural scenery,
just the same as many of the studios of French producers
are located on the Mediterranean.

Q. What has the fine weather to do with the work of a
studio? A. Because a great deal of work has to he done out¬
side of a studio, for getting outside scenes, and it is impor¬
tant that there should he as little waste of time os possible,
. because waste is very expensive in the production of pic-
tuves, and it is important to keep the actors employed as
O' * actively as possible. Good sunlight is also important to se¬

cure proper photographic quality.

Q. Then would you say that the term “manufacturer,” as
applied to the producer of motion pictures, was a misnomer
j in a sense? Does it correctly describe the occupation? A.

1G08 Frank L. Dyer, Direct Examination.

Frank L. Dvnn, Direct Examination.

11500

No, I do not think it does. I think the same relation exists
between the producer and a manufacturer, if we attempt to Q

separate them, that exists between the producers of the Cen¬
tury Magazine, who do the literary work and get up the
magazine, and the Do Vinne Press, that prints the copies of
the magazine.

Q. What percentage of motion pictures exhibited in this
country would you say are of a purely theatrical character,
that is to say, either drama, comedy or farce ? A. The num¬
ber varies from week to week, but I think the average would
be from 85 to 95 per cent.

Q. And the rest of the pictures are made up of so-called
scientific, educational, scenic and topical subjects, is that
correct? A. Yes, sir.

Q. What is meant by a scientific picture? A. A scientific
picture is one that illustrates some scientific phenomenon,
such as the flight of a bullet, or views of the moon, or a
chemical reaction, all of which have been shown in motion
pictures.

Q. What is an educational picture? A. It is not very
easy to—

Q. (interrupting) : Can you, strictly speaking, differen¬
tiate between a scientific picture and an educational picture?

A. Yes. I think an educational picture would be correctly
defined as one that possessed educational value without the
scientific attributes. For instance, a picture illustrating the
raising of sheep, or the iron industry, or the tobacco indus¬
try, or the sugar industry, all of which have been shown in
motion pictures. It is getting to be quite a common thing to
disguise educational pictures by a dramatic story, so as to
make them more attractive. For instance, the Edison Com¬
pany made a very well-known picture called “The Man Who
Learned;” which was designed to point out the dangers of
unsanitary conditions in connection with the supply of milk,
hut the moral was taught in a story of great dramatic inter¬
est. And we also made another picture called “The Wedding
Bell,” that was a strong dramatic story, but was essentially
an educational picture, because its object was to point out the ©<

evils of sweatshop labor. .

Q. What is a scenic picture? A. A scenic picture is one
that contains simply scenery, or possibly views taken in a
city, showing important buildings or streets. For instance,
a picture of the Alps would he a scenic picture, and one show¬

ing a panorama of Broadway, New York, would also be a
£) scenic picture.

. Q. And wimt is a topical picture? A. A topical picture
is one' that depicts a subject of topical interest, such as a
championship baseball game, or prize fight, or the inaugura¬
tion of a President, or a subject of this general character.

Q. What, do the so-called dramatic pictures, as the term
is used in the motion picture business, include? A. I do not
think the term dramatic picture is used, hut we refer to
dramas, by which we mean a story of dramatic interest, de¬
void of comedy or farcical features.

Q- Then the term “drama,” as used in this art, would in¬
clude tragedy and melodrama? A. No. We sometimes use
the term “melodrama” to mean a drama with tragic features,
but ordinarily the word “drama” includes everything of a
dramatic nature, except, comedies.

Q. Then are the terms used in the same sense that they
are used in the theatrical profession? A. Yes. In exactly
tile same sense.

Q. What are the considerations which enter into the
selection of a play to be produced on the motion picture
stage? A. Strength of plot, the timeliness of the subject,
interest of the story, the moral sought to be taught, are all
factors that are considered in the selection of a motion pic¬
ture play.

Q. They are precisely the same, then, as in the regular
theatrical business? A. Yes, sir, exactly. The motion pic¬
ture business, as I pointed out, is practically a theatrical
business.

Q. What means, if any, are resorted to by the producer
of a play or the exhibitor, in ol der to supply the omission
of the spoken word? A. The fact that with the. motion
picture play, there is no dialogue except, of course, in the
case of the talking pictures which are a recent develop¬
ment, it makes it impossible with a motion picture play to
get the very line shadings of emotion that are possible
with the. spoken word, so that the motion picture play is
V perhaps not as complex as the regular spoken play, hut

there are several ways to supply the deficiency of the
spoken word witli the motion . picture play, by which its
effectiveness is very much increased. For instance, the
actors, ns is well known, generally in rehearsing, make use
of words, and very frequently these words can he disting-

]G10 Frank D. Dveii, Direct Examination.

uiRhed on the screen, particularly when they are single
“ m,ch „s mother” or -help.” Then, the director lms
the advantage, which is not possible with the regular spoken
drama, of throwing sub-titles on the screen, that w t< saj,
words or phrases or sentences that are design^ .to tx
nlnin the siguilicance of the scene which is to follow. A
sub-title is used when the director fears that the proper
effect of a scene will not he appreciated. Then also
the motion picture play, it- is Very common to th ow ,m
the screen,, letters and telegrams and document* t ^

audicnce can read, for the purpose of making tl.e plot clea ,
n l id on the regular stage, are read by one of the
characters as a part of the dialogue. Then, a very effective
way of supplying the deficiency of the spoken word, is by
so-called double exposure, where, on the main picture up-,
pears a small auxiliary picture designed to explain the
action of the main picture. For instance, m a regnlai
spoken play, if one of the character, wished «ie ‘iiulience
to know that at one time he had been a -cowboy on t
western plains and lmd taken part in a certain incident, In.
woum tcU his story as part of the dialogue. In the motion
picture piny, we actually throw on the screen as an a
ary to the main picture, scenes showing the character ns a
cowboy on the western plains, and enacting the same inci¬
dent that he would describe by words in the regular play.
These various expedients have been developed in the art,
and permit motion picture plays of fairly complex charac¬
ter which are perfectly intelligible to the audience.

Q. Then the double exposure is a device winch makes
possible dramatic representations on the motion picture
stage which is impossible on the legitimate stage, is that
correct?, A. The double exposure, of course, on the regular
stage would be impossible, lint the same effect is secured
on the regular stage by menus of the spoken word.

Q. But the dramatic action is wanting? A. The dra¬
matic action is wanting, of course. _ „

Q. You have mentioned the play culled Quo \adis.
Have you ever seen that play? A. Yes, sir.

Mr. Guosvhnou: May I interrupt? Who brought
out Quo Vadis?

Frank L. Dyer, Direct Examination. . 1G11
The Witness: The Cines Company at Milan.

Mr. Gbosvbnor: That is a foreign company, isn’t

Mr. Grosvbnor: I object to any examination
about Quo Vadis.

By Mr. Caldwell:

Q. Was Quo Vadis a picture imported by one of the
so-cailed licensed importers of the Motion Picture Patents
Company? A. Yes, sir, it was imported by Mr. Kleme.

Q.. And that picture is licensed by the patents owned
l,y the Motion Picture Patents Company, is it not? A.
Yes, sir.

Mr. Caldwell: I think that answers your ob¬
jection, doesn’t it, Mr. Grosvcnor?

By Mr. Caldwell:

Q. There is a scene in that picture that, takes place in
the Roman amphitheatre, is there not? A. Yes, sir.

Q. Could you describe Hint scene briefly? A. Yes. The
scene shows the representation of the Roman amphitheatre
with Nero and his attendants in the seats or honor, and a
good many thousand spectators depicted ns the audience,
and tlie turning of the lions into the amphitheatre to de¬
vour the Christian martyrs.

Q. Are all of these spectators in motion? A. They are
the photographs of real people.

Q. Ill motion? A. In motion.

. Q. Would such a scene ns that he possible on the regu¬
lar dramatic stage? A. No, sir. ’ _ •

Q. Why not? A. Because of the limitations of the
stage, it would he impossible to anywhere near approximate
the size and grandeur of the settings. On the regular stage,
the audience in the amphitheatre would be confined prolm-

1G12 Frank L. Dyrk, Dinner Examination.

bly to fifty to a hundred people. In the motion pictures, I

think there were tit least three thousand m the audience, Q

and possibly five.

Q. On the regular stage, the spectators would be repre¬
sented, would they not, by painted linages on the scenery?

A. They might he. Or they might be- real people gathered
on the stage.

Q. There is another scone in that piny which depicts
the burning of Rome, ' is there not? A. Yes. There are
several scenes allowing the burning of Rome.

Q. Could that scene be possible of reproduction on the
regular dramatic stage? A. Not to the same extent. Not
with the same vividness nor could it cover the same area'.

The regular stage is necessarily circumscribed by. reason of
its limited size.

Q. From what sources do the producers of motion pic¬
ture plays obtuin their plays? A. Generally, the plays are
prepared by a new type of literary artist, who lias devel¬
oped with the art, called the scenario writer. Sometimes
these scenario writers are regular dramatists. For instance,
the present Congressman, E. W. Townsend, of my home
town, was a scenario writer for the Edison Company, anil
was also a dramatic writer and novelist. These scenario
writers base their plays on original plots, and somejtimep
they base them on other sources of literary work, such
ns standard works of fietion. The Bible is a very potent
source of inspiration for motion picture plays. Most of
the biblical scenes have been enacted as parts of motion
picture dramas. Most of the works of Dickens and Thack¬
eray have been converted into motion picture plays. Many
of the plays of Shakespeare have been used, and other
standard dramas. Poetry is also a source of inspiration.

The Lady of the Lake lias been given. Such an apparently
impossible subject as Pippa Passes, by Browning, was
made into a very beautiful motion picture play by the Bio¬
graph Company. By means of the motion picture, any
work of Action, or of the drama, can be presented graph-
ically nnd vividly to the audience for Hve cents. W

Q. Does it happen with more or less frequency that the
authors of plays, playwrights, who write for the regular
dramatic stage, also write motion picture plays?' A. Many .

dramatic authors write motion picture plays. For instance,

I have mentioned the case of Congressman Townsend. And

(

Frank L. Dyeii, Dinner Examination. 1013

I know that Mr. Augustus Thomas is now' working on mo- 1
0 tion picture plays, and also Charles Klein.

Q. Does it often happen that a well-known work of
Action is dramatized for the motion picture stage, just
ns it is on the regular dramatic stage? A. Oh, yes. That
is another source of inspiration. For instance, the Famous
Players Company are just putting out a play called, “In
the Bishop’s Carriage,” which Arst appeared as a novel.

.And also, “Soldiers of Fortune,” by Richard Harding
Davis, is now being mnde into a motion picture play, and
this Arst appeared as a novel.

Q. Do you happen to know whether “Ben Hur” and- ®
“The Last Dnys of Pompeii,” have also been dramatized
for the motion picture stage? A. Yes. Both of these
works have been made into motion picture plays.

Q. Would you say that that is typical of whut has been
done, and what is being done every day in the motion
' picture art? A. Yes. The motion picture art is bringing
these Ane, standard, elevnting works, to the attention of
millions of people of the United States, who possibly other¬
wise would know nothing wbntever about them.

Q. Does it often hnppen that a regular dramatic pro- „
dnetion which has appeared upon the so-called legitimate
stuge, has also been enacted before the motion picture cam¬
era, and reproduced on the motion picture stage? A. Yes,
that also has been, and is being, done.

Q. Is any knowledge of stugecraft, ns applied to the
legitimate stage, requisite for the motion picture produc¬
tion after the play has been selected? A. Absolutely. The
motion picture director has to be just as skilful in sizing
up and properly plucing a. dramatic situation, ns on the
regular stage. He has to also keep in mind at nil times,
the limitations of the Aeld of the camera, and must keep 4
his actors at the proper distance away from the camera.

And he also 1ms to be familiar with the conditions of light,
so ns to secure the proper photographic effect But in a
dramatic sense, his work is identical with the work of the
ordinary stage director.

■ Q. And the ultimate object is to produce the same ef¬
fect upon the motion picture audience ns is produced in
a regular theatre? A. That is the real object. .

Q. To what extent do the producers of motion pictures’
have stock companies of actors, and actresses in their ein-

1014 Frank L. Dyer, Direct Examination.

1 ploy? A. All the licensed producers, ns far ns I know,

employ from one to ten regular stock companies for the A)

purpose of making the motion picture plays.

Q. And the same thing is true of the unlicensed pro¬
ducers, is it not? A. As far ns I know, it is.

Q. From what class of persons are these stock com¬
panies recruited? A. In a large measure from actors from
the regular stage. There is a constant shifting back and
forth of actors from the regular stage to the motion pic-,
ture stage, and vice versa, and constant shifting of actors
from one motion picture company to another, in fact,

2 the motion picture work is looked upon hy the actors ns
simply one of the opportunities for employment.

Q. Is it quite common for stars in the theatrical world
' to accept engagements on the motion picture stage? A. Tes.

This is getting to he quite common. Sarah Bernhardt,

James K. Hnckett, Mrs. Fiske, Charles Hnwtrey, are all
well known stars, nnd they have appeared in motion pic¬
tures. ■ .

Q. Will you describe a motion picture studio and its
equipment? A. Motion picture studios are of throe classes.

First, the outdoor studio; second, the daylight studio; and
8 third, the so-called dark studio. With an outdoor studio,
there is simply a platform out of the sunlight with the
stage sets, properties, and scenery, and the action takes
place out of doors, the photographing being done by sun¬
light. These studios, of course, are used only in good
weather, and for a limited number of hours each day. They
are more common in places like Jacksonville and Los An¬
geles, where the. climatic conditions are favorable. The
daylight studio is a large building, somewhat like an im¬
mense conservatory, with an extensive stage, nnd a glass
4 roof, and ordinarily, glass sides. Generally, daylight stu¬
dios are equipped with powerful arc lights for the purpose
of supplementing the sunlight in overcast weather, or for
working at night, or for accentuating certain' lighting ef¬
fects which would be impossible for sunlight. For instance,
the glare from a fireplace. These daylight studios are pro- A.

vided with screens made of thin cloth to be pulled over the
glass top for the purpose of diffusing the light, exactly as
in an ordinary portrait studio. The third class, or dark
studio, is very similar to the daylight studio, except that, it
is a large closed room lighted entirely by artificial means.

Frank L. Dyer, Direct Examination.

1015

A modern studio is equipped with a scene-painting depart¬
ment for the manufacture of scenery, nnd a large property
room is also provided, in which a multitude of, the com¬
moner properties are kept, also costume room, carpenter
shop, and other necessary accessories.

Q. Dressing rooms for the actors nnd actresses? A.
Dressing rooms for the actors and actresses, nnd rooms in
which the directors work, nnd so forth. I have lmd in mind
in answering your question, particularly the Edison day¬
light studio, but I have visited the studios of most of the
licensed manufacturers, and the same description applies
substantially to all of them. Sometimes the daylight studio
will be combined with a dark studio in a building of several
Jloors, the upper floor being enclosed in glass so as to com¬
prise the daylight studio.

Q. After the motion picture play has been selected,
what is done in the way of providing costumes and scenery,
and properties, and so forth? A. Ordinarily the director
who is assigned to put on the play, after having studied the
play very carefully so as to thoroughly understand it, pro¬
vides that the proper scenes shall be painted, giving the
directions to the scene-painting department, and also pro¬
vides for the nccessnry costumes and properties. He gen¬
erally explains the plays to the actors who may have been
selected to perform the parts nnd explains to them what
characters they are to take, and how they are to be made
up. The making-up of a motion picture actor is the same
substantially as on the regular stage, except that the make¬
up is somewhat accentuated, and also regard has to lie
taken to the proper photographic quality of certain colors.
For instance, photographically, blue shows almost white,
and red is almost black, so that, a great deal of rouge
which might he used on the regular stage, would be avoided

in the moving picture art, as it would appear black.

Q. It is customary to rehearse the actors and actresses
in their parts before the camera is brought into play? A.
Oh yes. The rehearsing is very carefully done,, because
upon that depends the, whole success of the final perform¬
ance The rehearsing of a motion picture play is rela¬
tively as carefully done as on the regular stage. It takes
sometimes all day to get the actors properly rehearsed to
take a scene. And in the case of some scenes involving a

1010 Fkank Jj. Dyeu, DiJiHCT Examination.

1 great many actors, it may take several days to rehearse the j

scene. 9

Q. During this rehearsal, do the actors speak their respec¬
tive parts, or is the action entirely pniitomime? A. A cer¬
tain amount of talking is done, principally for the purpose
of making stroug sceues more convincing. The actors do
not have long involved dialogues the same as on the regu¬
lar stage, hut they generally are talking— •generally arc say¬
ing something along the lines of the actions that they are
trying to portray.

Q. In some of the motion picture dramas, is any din-

2 logue written for the performers by the author, or is the
scenario entirely descriptive of the dramatic action? A. It
is quite a common thing for scenario writers, in order to
emphasize the strength of certain scenes, to prepare simple
dialogues for the characters to speak, although this is not
always the case.

Q. Then the motion picture camera is not brought into
play until after the company lias been rehearsed, and their
rehearsal is satisfactory to the stage manugev or director,
is that correct? A. That is correct. I might say that the
motion picture camera is the first observer of the finished
performance.

Q. And up to that point, no mechanical appliances have
been introduced whatever, have they? A. Except such ns
might appear as mechanical properties; hut nothing has
been introduced in a mechanical sense that differentiates
the motion picture play up to that point from the regular
dramatic performance.

Q. If in the development of the negative motion picture,
any defects are found, either of acting or photography, wlmt
happens? A. The scene is taken over again, the actors be-
4 ing again required to enrict the scene, and a new photo¬
graph being taken of it.

Q. That involves considerable loss and expense, does it
not? A. That involves a very great loss, because, although
the loss of film may not be very much, yet the loss in time
of the actors amounts to a great deal. w

Q. Is it ever the practice to have more than one camera
turned upon the scene of action at the same time? A. Yes.

It is generally the practice to have about two cameras.

This Was done in the case of the Edison Company for the

Fuank L. By mb, Dinner Examination. Kili

purpose of providing a negative which could bo sent abroad, 1
^ because our foreign business was the sale of copies of pic¬

tures made in Paris. By having two cameras, the producer
can select the better picture. The two pictures would dif¬
fer, because they are taken from different points of view,
and one is better than the other. In the ease of a very
expensive scene, lor instance, the collision of two locomo¬
tives, where, in case of some trouble, it would he impossible
to have a second performance, the producers may have as
ninny as ten cameras on the scene so as to he sure that the
picture is secured. You understand that sometimes these
cameras fail to work, and after the scene 1ms been patiently
acted, the director finds that not a foot has been tak.ea.

Q. And in the taking of a picture representing some
topical event of unusual interest, such as the inauguration
of a President, which yon have mentioned a while ago,
more than one camera would lie brought into play there,
would it not? A. Yes. It would lie difficult to get n Presi¬
dent to give a second performance in the case of failure.

Q. Explain wlmt is done with • the negative. A. The
negative is developed and dried, just like any ordinary
kodak negative, except that its great length 1ms to he 3
taken care of. For this reason, it is generally wound on
a big drum, or around a rack about the size of a clothes
horse, and in that condition, it is developed and dried.
From this negative, positive prints are secured iu exactly
the same way as making u transparency, except that the
transparency is on a celluloid strip, and not on a glass
plate. And of course, the printing lias to be done mechani¬
cally, owing to the euormous number of pictures that have
to be printed, so that they are run through a printing ma¬
chine that is very similar to a projecting machine, except
that it runs much more slowly, and after the printing of 4
positives, they are developed and dried like any other photo¬
graphic transparency.

Q. Have. you stated yet what is meant by sub-titles, in
connection with the exhibition of picture dramas? A. A
% sub-title is one of the means used to take the place of the

spoken word, and is a word, or phrase, or sentence, or a
short description, tiiat is thrown on the screen, either in
advnncc of the whole picture, so as to give the audience
some idea of what is going to happen, or else, in the ease
of some particular scene that' may he rather obscure, to

1018 Frank L. Dyer, Direct Examination.

advise the audience wiiat the scene is designed to show.

Sometimes, also, a sub-title is used to supply a hiatus in 0

the performance, for instance, the word “Later,” or “Twenty
years after,” or something of that sort is used, so as
to prepare the audience for the scenes that are to follow,
and not confuse them.

Q. Is there any limit to the number of scenes which
may be utilised in a motion picture drama? A. Practically

Q. Is it customary for the producer to give n private ex¬
hibition of the drama for criticism, before it is leased or ,

placed on lease, or placed on sale? A. That is invariably
the case. The director or producer, of course, would not
think of putting out a play unless it had been very care¬
fully inspected, so as to be sure that it was of the proper
standard. And these preliminary inspections are also
done for the purpose of eliminating superfluous scenes. It
is almost always the case with a thousand-foot picture,
that the negative may he from 110 feet in length up to
possibly 2,000 feet, and it is necessary to cut this down
to a thousand feet, so as to make a complete reel, so that
the picture is gone over quite a number of times in order
to get it in the best Anal form.

Q. Do you see any analogy between the distribution
of these motion picture plays and the sending out of one
or more road companies from town to town, to produce
a regular dramatic play? A. Yes. It seems to me that the
two are strictly analogous. With each, arrangements are
made with the theatres for definite performances, and
dates; and with each, the company in the case of the
theatrical troupe, or the films in the ease of a motion
picture play, are distributed and sent to the exhibitor so
as to fill the booking dates. Ordinarily, with the motion
picture play, owing to its fragile nature, it is sent back :
to the exchange distributor after being shown, so that it
can be inspected and repaired and kept clean, but in cer¬
tain territories, speaking for the General Film Company,
it is the custom to send motion picture plays out on a cir- 0

cuit from theatre to theatre, so that they may pnss through
eight or ten theatres in succession, before coming back
to the exchange, and such a practice would be 'identical ‘ ;

with the practice of booking il road show from theatre
to theatre. With the ease of special featnrc pictures, which

Frank L. Dyer, Direct Examination. 1010

seem to be a recent development, it is the practice to hook 1
(% them for definite dates, and those dates are filled by the

booker in exactly the same way as with the regular theat¬
rical business, and the motion picture play is advertised
by the theatre in advance, in exactly the same way ns the
regular road show is advertised.

Mr. Caldwell: Mr. Examiner, it is now 12:30,
and I suggest that we adjourn until 2:30.

The Examiner: Very well.

Whereupon, at 12:30 P. M., the hearing is adjourned
until 2:30 P. M., at the same place.

New York City, November 11, 1033.

The hearing was resumed pursuant, to adjournment at
2:30 o’clock P. Jl., November 11, 1013, at Doom 150, Man¬
hattan Hotel, New York City.

The appearances were the same as at the morning ses- g

Thereupon Fit AN K L. DYEK resumed the stand.

Direct examination continued by Mr. Caldwell:

Q. Mr. Dyer, on wlmt. does the value of a motion pic¬
ture depend? A. Tlmt is a rather difficult question to
answer, because so many factors enter into the value of
the picture. Sometimes the picture is interesting, and
therefore, valuable in one section of the country, and is
not popular at all in another section of the country. In •
:■ fact, some of our most popular pictures in some sections
can hardly be shown in other sections of the country, hut,
in a general way, the value of. a picture depends upon the
interest, of the story, the moral that the story teaches, the
skill with which the story is told, the clearness, or obvious¬
ness of the story, the quality of the acting, the popularity of
the actors, or, at least, the star in the play, the qualify of
the photography, and the steadiness of the picture, are all
factors determining its’ value.

1020 Frank Ij. Dyer, Direct Examination.

1 Q. Does the skill of the acting, or personality of the

actor, have anything to do with it? A. Yes, some actors Q

are very popular, although the most popular actors may
not be the most skillful. The popular actors seem to have
the indefinable quality of taking a good photograph, and
making appeals by reason of their inherent magnetism.

Q. Does it frequently lmppen that the cost of a produc¬
tion is so great that the producer cannot sell it with profit
on a footage basis merely? A. That is true, and with the
recent development of the art it is getting more true 'than
it was formerly. Pictures are very much more expensive

3 to make now than they were in past years.

Q. What would you say ns to the maximum cost of a
production beyond which the manufacturer or producer
could not afford to sell, on a footage basis? A. Based upon
present conditions, and having in mind my experiences
with the Edison Company, I should say that a picture that
cost two dollars per negative foot could be handled with
profit, and one that cost two dollars and fifty cents per
negative foot would involve a loss. I think the critical
point lies between those two extremes.

g Q. Mr. Dyer, what are the methods now in vogue in
the General Film Company in distributing motion pic¬
tures handled bv it to the exhibiting theatres? I mean
now with reference to pictures which are not leased upon
a footage basis? A. You mean the General Film Company,
or the subjects handled by the General Flim Company, or
handled by all?

Q. The General Film Company? A. The only picture
that I recall, that the General Film Company is handling
at the present time, not on a footage basis, is the picture
entitled, “From the Manger to the Cross.”

4 Q. I did not mean to confine my question in point
of time to what was going on today, hut what 1ms been
its practice with respect to pictures of this class? A. I
will ask ’ the Examiner to please read me the last, three

or four questions. ^

The following questions and nnswers were read to
the witness:

“Q. Mr. Dyer, what are the methods now in
vogue in the General Film Company in distributing
motion pictures handled by it to the exhibiting the-

Frank L. Dyer, Direct Examination. 1021

ntres? I mean now with reference to pictures which 1
are not leased upon a footage basis? A. You mean
the General Film Company, or the subjects handled
by the General Film Company, or handled by all?

“Q. The General Film Company? A. The only
picture that I recall that the General Film Com¬
pany is handling at the present time, not on a
footage basis, is the picture entitled, ‘From the Mon¬
ger to the Cross.’

“Q. X did not mean to confine my question in
point of time to what was going on today, but what
has been its practice with respect to pictures of 2
this class?”

A. (continuing) : Ail the pictures that I recall that
have been handled by the General Film Company have
been on a footage basis, except that for a short period, a
year or more ago, it acquired certain multiple reel sub¬
jects, by paying the negative cost of the manufacturers, and
I know in one or two instances extra payments to the man¬
ufacturers have beeii made over and above the footage price.

The further exception is “From the Mnnger to the Cross,” g
which we handled for the Kalein Company, and sold out
the various State rights for most of the States.

Q. These were all cases involving great negative cost,
were they not? A. Yes, sir.

Q. Do yon know wlmt the negative cost of the picture
which you have just mentioned, "From the Mnnger to the
Cross,” was? A. It was a very expensive picture, made in
Palestine, and it involved the transporting of a theatrical
company from New York, to Palestine, and return, with
some properties. I lmve been told that the picture cost
twenty-five thousand dollars, and I have no reason to 4
doubt the correctness of this statement.

;Q. Yon mean that the taking of the negative cost that
amount. of money? A. Yes, sir.

Q. Was tlie picture entitled “Quo VndiB,” handled by
the General Film Company? A. No, sir, it was handled by
Mr. Kleine personally.

Q. Well, in the case of an ordinary motion picture
which is sold or leased upon a footage basis, what is it that
determines the income that the producer may receive from
such pictures? A. The' number of prints he may be able

1G22

Frank T. /. Dyer, Direct Exa

Frank L. Dyer, Direct Examination.

1023

to sell, multiplied by the number of feet, multiplied by the

cost per foot. ®

Q. Wlmt do you mean by the expression, “negative
cost?” A. The negative cost is the cost of making tbe
negative. That is to say, the cost of the negative fllm,
cost of the actors directly employed in the play, tbe pro¬
portion of the actors’ salaries chargeable to tbe particu¬
lar play, salary of the director and camera man, cost of
scenery and properties, the cost of electric light, travelling
expenses of actors, and the proportion of general expenses
attributable to the particular play.

Q, Does it frequently happen that in producing succes¬
sive scenes of the same motion picture drama it is neces¬
sary to transport a company of actors to points greatly dis¬
tant from the studio where the first scene, or some of the
scenes are taken? A. Yes, this is very common, and in fact
necessary. It is a very common thing for the producers to
send companies of actors to the Adirondacks, and to Maine,
for the purpose of taking Klondike pictures, and they are
shifting around all the time to find suitable locations where
outside door scenes can be taken.

Q. For instance, if Mr. Selig, or Mr. Spoor, in Chicago,
were producing a picture where one of the scenes takes
place on board a trans-Atlantic liner, would it be neces¬
sary for him to transport his company from Chicago to
New York for that purpose? A. Possibly not in that case,
for there are very large vessels on the Great Lakes that
might be satisfactory as representations of an Atlantic
steamer, but other illustrations might he given where a
company would lie transported over very long distances.

For instance, the daily papers of two or three days ago
spoke about the taking of a picture called “Soldiers of
Fortune” that necessitated the sending of a company to
Santiago de Cuba.

Q. Is that a dramatization of Richard Harding Davis’
story entitled “Soldiers of Fortune”? A. So I' understand.

Q. Does the necessity, though, of transporting a com¬
pany of actors from place to place constitute quite a fac- £

A. (interrupting) : Oh; yes —

Q. (continuing) — in the negative cost? A. Yes, it is 3
likely to he a considerable expense; and another expense

that, perhaps, you have not considered is the waste of time
gj , — a company for instance might go up to Maine for the

purpose of taking two or three scenes in a play, and be
stormbound for a week or so, and not be able to take those
scones until the sun caiue out. Frequently companies are
loafing around for days at a time, without being able to do
anything in the way of results, or rather get any tiling in
the way of results.

Q. Then the position of a motion picture producer who
lrns taken his negative is somewhat analogous, is it not, to
a magazine publisher when he lias the type all set up and
ready for printing? A. Yes, I think the nnology is very
close.

Q. If the producer manages to dispose of only one posi¬
tive, the entire negative cost is charged on that positive, of
course, is it not? A. Yes.

Q. And his profit depends entirely on the number of
prints he may dispose of of a given picture? A. That is-
correct, and very slight fluctuations in the number of prints
are of importance. For instance, if, under present condi- _
tions, it is necessary for the producer to sell thirty prints
of a subject in order to cover the negative cost, — then if he
sold twenty-nine prints lie would lose money, and if he •
sold thirty-one prints he would make money, and yet the
difference between twenty-nine and thirty-one, perhaps, su¬
perficially considered, would not appear important.

Q. Would you say then that the production of a motion
picture play involved many speculative matters? A. The
art is highly speculative. The producer might calculate the
cost of a negative, and find that he was two or three hun¬
dred per cent out of the' way — the same element of specu¬
lation that is present in the regular theatrical business,—
because it is known that more plays are failures than those
that succeed.

, Q. Does it frequently happen that a motion picture play-
which has been produced at great expense is a total failure
with the public, just as in the regular theatrical business?
A. Yes, sir; some pictures are looked upon by theatres as
of so little interest that they refuse to run them, and. try
to change them for something else.

Q. What is the average duration of the performance of
a motion picture play? A. A single play contained on one

1G24

Frank I* Dyer, Direct Examination.

reel would occupy about fifteen minutes of time, but this
varies, of course, according to the speed with which, or at
which, it is run through the machine. Fifteen minutes is
about the normal time.

Q. How many plays are usually given at. one perform¬
ance? A. Generally three or four; sometimes ns high ns
seven or eight.

Q. In the case of a motion picture play involving four
to eight reels, as is sometimes the ease, what is the length
of the performance? A. From one to two hours.

Q. Does it frequently happen that a performance is en¬
tirely devoted to the production of a single play, or the
exhibition of a single play, just as on the regular dramatic
stage? A. That is the form of entertainment that is ap¬
parently developing in this country.

Q. Has the tendency been in recent years to lengthen
the performances in the regular motion picture theatres?
A. Yes, it has. In the early days it was quite customary
to rnn only a single reel, and this was generally cut in
two on Saturdays so as to keep the audience moving.
These were the days when the pictures were shown largely
as matters of novelty.

Q. For how long a time is the same picture shown, or
the same play shown in the same theatre? A. Generally a
picture is run only one day, but in some localities some¬
times it is run for two or three days.

Q. Taking into consideration, therefore, the short time
which an exhibitor makes use of a play, would it he finan¬
cially practicable for him to obtain these pictures direct
from the producer? A. No, sir, not when yon take also
into consideration the fact that he only gets five or ten
cents admission; • ■

Q. Have you found that the exhibitor objects to the
production of a play which has been produced in a neigh¬
boring theatre only a short time before, or concurrently
with the production at his own theatre? A. Yes, he does
object to this. This is called “repeating,” or, in the case of
where a programme, or substantially the same programme
is simultaneously shown in two neighboring theatres it is
called “conflicting,” a conflicting program. I think that
exhibitors without exception are very much opposed to re¬
peating nn'ft conflicting programs. They say that if a pic¬

ture 1ms been shown in their competitor's theatre before it
gets to them it has lost its drawing power.

Q. And that objection is bused on the unwillingness of
the public to see the same play a second time, is it not? A.
Yes, sir.

Q. Well, does the length of time which any given copy
has been in use affect the desirability of the picture from
the standpoint of an exhibitor even though it limy not
have been shown in his own town or neighborhood? A,
Yes, the theatres, of course, try to get the pictures at as
early runs as possible; and they also object to pictures
which have been worn or injured by previous exhibitions.

Q. Have I asked you yet, Mr. Dyer, to explain what is
meant by “release date” in the motion picture business?
You may answer that question anyhow. 1 do not think
you have touched upon that subject. A. Itelense date is
the date set by the producer on which it is released for
exhibition. Itelcase dates arc used in eases ol magazines,
and we also used release dates in connection with the
phonograph business, refusing to allow jobbers or dealers
to ship them out of their stock before 8 A. M. of the re¬
lease date. The release date rule was introduced for the
purpose of preventing unfair practices on the part of ex¬
changes, so that one exuhunge, if it should accidently conic
into possession of a picture before its competitor, would
not thereby have an advantage over his competitor. Itu
lease date is not particularly important under the condi
tions of the General Film Company, except os a means foi
determining on the value of the service, — so that a theatre
will be able to tell whether it is getting a first-run reel, il
it is imying for first-run service.

Q. I think one of the witnesses for the petitioner liai
testified that the release date rule originated with the
Patents Company. It that correct? A. No. I am -quite
sure that under the Edison licenses the films were re
leased on definite release dates, and I believe that some u
the producers were using release dates before the time o:
the Edison licenses.

Q. And tlie release date, rule was a trade custom Ion;
established and well established in the business prior t<
the organization of the Patents Company? A. Yes.

Q. A trade custom?, A. Yes.

Q. In this connection, Mr. Dyer, I would like to asl

1020

Frank L. Dyer, Direct Examination.

yon if you happen to know whether your competitors have
a release date rule? A. They have, the same as we have.

Q. That rule is regarded of considerable importance, is
it not, by the manufacturers? A. I think so. It enables
the value of service to be accurately measured. If a thea¬
tre is paying for first-run service and gets a picture on the
date of release advertised in the trade papers he knows lie
is getting what he pays for, hut if we didn’t have the re¬
lease date we probably would have arguments all the time
in convincing theatres that we were giving them the films
that they had contracted for.

Q. Would a violation of that rule, even of so much as
a quarter or half an hour at times work injury in the busi¬
ness? A. Yes. Any violation would be likely to work
injury, and, of course, if you have a rnle you have to en¬
force it, and a violation to the extent of a quarter or half
an hour is as bad as a violation of two or three days. I
recall that during the time that we were in competition
with the Kinetograph Company, in Atlanta, last Spring,
we had a very important customer in Chattanooga, who
was taking our complete output in three theatres, and the
Kinetograph Company had a single customer there who
was using the same output in his theatres, showing the
entire licensed output. The films ordinarily left Atlanta by
a train leaving about 8:30. There was a train called the
Dixie Flyer, that reached Atlanta at 7:50, but neither of
us was able to get our films' on that train.

Q. What is the release date hour? A. The release date
hour is eight o’clock. They were somewhat sharper than
we were, and kept track of this Flyer, and on two or three
mornings when it was about half an hour late, they man¬
aged to get their films on the train, and reached Chatta¬
nooga two or three hours before we did, so that their thea¬
tre was able to show films in advance of ours. This was
not a violation of the release date rule, but shows the iim
portance of fifteen minutes or an hour's leeway in this
business.

Q. Who is it that determines the length of the pro¬
gram, and the frequency with which it is changed? . A. The
theatres in a given locality generally co-operate together
and use programs of substantially the same length, and
with the same changes per week. That, is to say, in some
localities the films would lie changed every day, and in

Frank L. Dver, Direct Examination. 1027

others they may change two or three times a week. This
seems to be a matter that the theatres regulate themselves.
Therefore when a theatre owner comes to one of our
branches for service he generally requires service that will
enable him to compete on an equality with his competitors.

Q. Will you explain what is meant by “first run,”
“second run,” and “third run,” etc., in the business? A.
Ordinarily a first-run film is a film that is shown on its
release date. A second-run film is shown the day after re¬
lease date, and so on; but in some localities the exhibition
of a first-run film means a film that is shown for the first
time in that locality. Thus, for exnmple, in Jacksonville,
Florida, a first-run film, as I remember it, is about a week
old.

Q. Isn’t one of the chief problems of an exchange to
keep all of its pictures in constant use? A. That, is the
principal object of an exchange because it is necessary that
the films should lie kept at all times in us continuous use
as possible with minimum periods of idleness. When a film
is idle, and lying on a shelf in an exchange, it is. not earn¬
ing anything. The film business, or rather the exchange
business, is a business with tremendous depreciation. It is
like the ice business, because the value of the product is
melting away every day. The greatest value of the film is
in the early runs, and it is particularly important to have
no hlnnk spaces on the books indicating dates of idleness,
particularly in the early runs of the films. This problem
would not be difficult with only one film, but when each
exchange is buying from thirty to ninety reels per week,
and has stocks on hand of thousands and thousands of
.films, and is supplying from a hundred to three hundred
customers, and each customer is taking a service of from
twenty-one to fifty reels per week, and the service is
changed from every day to two or three times a week, the
problem is exceedingly difficult to keep the films always in
use, and the successful film manager, or exchange manager,
rather, jis the one who will get the maximum use out of the
9 largest number of films at all times. If the periods of idle¬

ness lire considerable, then the expense to the exchange is
high, and the price of service to the exhibitor is necessarily
higher. So that the object of the business is to try to keep
the films busy at all times, so that the cost of the service
may be kept as low as -possible.

1G2S Frank L. Dyer, Direct Examination.

1 Q. So if a picture is idle on tlie second day after its re¬
lease, that is to say, is not exhibited anywhere, will a theatre
give us much for that picture on the third day following its
release as it would the second day, it not having been shown
but once before? A. No. The theatre is not interested in
our troubles. He does not care whether we rent it on the
second day or not.

Q. What would represent a fair average of the cost to
the exhibitor of a first-day picture?

Hr. GnosvENOn: Are you talking about here in

^ New York City or in some small country town?

Mr. Caldwell : I will say in New York City.

The Witness : The cost in New York at the present time
is about seven dollars per day.

By Sir. Caldwell:

Q. Aud for the second day run? A. I think, about five
dollars, but I do not keep those figures in memory. It is all
subject to competitive conditions.

3 Q. Then,' in New' York City a theatre taking a picture
which was idle on the second day w’ould not be willing to pay
five dollars for it? A. Not the second day price. He pays
the price he agreed to pay. He does not make his agreement
for a third-run picture with any knowledge of whether the
picture will be shown for the second time, or w'hether it will
be shown at all on the second day.

Q. Then the periods of idleness of any given picture rep¬
resent an absolute loss to the exchange? A. Exactly; the
same as when a day laborer is incapacitated by rheumatism,
he does not earn anything the day he is not working.

4 Q. What relation is there, if any, betw'een the number of
customers served by an exchange, and the cost of the service
to a customer? A. It is, of course, desirable that there
should be as many customers as can be handled with the
available supply of films, so there will be minimum periods
of idleness, because in this way the service is linndled at its
maximum efficiency, and the price of the service may there¬
fore be low'. Tf there are few customers, and considerable
periods of idleness of the films, the, expense of the service is

Frank X. Dyer, Direct Examination. 1C29

proportionately increased and the cost to the exhibitor is
likewise higher.

Q. Can a single exchange supplying a given territory
supply a better and cheaper service to the exhibitor than if
that same territory was served by two or more exchanges?
A. Yes, sir; I think so.

Q. Why? A. I think it is the universal experience in
almost every business that a single unit can give a cheaper
service than two small nnits w’liose aggregate size is equal to
that of the large unit. The small exchanges would have pro¬
portionately high expenses; each would, have to have a man¬
ager, and the number of employees required to run two small
exchanges 'would be more than would be required to run a
single large exchange. I believe, also, that with two small
exchanges the periods of idleness of the films W'ould in the
aggregate be more than with a single large exchange, so that
the service would be less efficient.

Q. Yon have already explained what is meant by a re¬
peating program. What is meant by a conflicting program?
A. That is where repeating takes place to an aggravated ex¬
tent, where substantially the same program, or at least the
principal films of the program, nre simultaneously shown in
two competitive theatres. This was one of the evils that was
corrected by the General Filni Company.

Q. Doesn’t it usually happen, though, u’herc two or more
exchanges serving the same territory are obtaining their
pictures from a common source of Bupply? A. That was the
practice. Even at the present time, with branches of the
General Film Company located in a single territory, as, for
example, Chicago, we have from time to time trouble from
this source, although those branches nre under one common
control.

Q. That is considered an evil in your business, and which
you promptly- correct whenever your attention is called to
it? A. Absolutely. It is a source of great evil, and when¬
ever it happens it results in a loss of business.

Q. Do you consider it desirable, from the standpoint of
the exhibitor, that eneb exchange in a given territory should
limit, itself to the productions of a given number or group of
producers whose pictures may not be obtained by any other
exchange in that, territory? A. Yes, sir; I think that is the
only way the business can be effectively handled. It is
necessary that the danger of. conflicting programs should

Frank L. Dyer, Direct Examination.

Frank L. Dyer, Direct Examina

1031

lie removed. If there were two or more exchanges supplying
service in the same neighborhood, there would always be the ^

danger of conflicting programs. In fact, before conflicting
programs were eliminated, a theatre hnving picked a certain
film was afraid to advertise it, because he knew that, if ho did
his competitor would probably get the same picture from
some other exchange and show it in advance of his advertised
date, so as to take advantage of his advertising expense.

This is not supposition, but at one time was a very real evil,
so that as a result of it the theatres never advertised their
films in advance, and the audience never knew- what they
were going to see until they came down to the theatre on the
night of the exhibition. At the present time, without con¬
flicting programs, a theatre is able to advertise its program
two days to a week in advance, and, in fact, it is qnite a com¬
mon thing for theatres nowadays to get ont printed programs
giving their entire shows for all the week, so that people can
go on a certain night and see a particular picture.

■ Q. Is it considered just ns objectionable that the same
motion picture be exhibited in two theatres in the same town
or in the same neighborhood on the same night, as would be
the giving of two performances of a regular play, “Within
the Daw,” for instance, in two neighboring theatres, or in
two theatres in the same town on the same night? A. It is
considerably more objectionable, for the reason that a good
many patrons of picture shows are called “Moving Picture
Fans,” who occupy the same relation to the picture business
that baseball fans do to the bnseball profession. They go to
two or three moving picture shows every night, nnd in the
case of a theatrical performance of “Within the Law,” that
could be seen, of course, only once by any one person, whereas
that person, could goi to two moving picture show's the same
evening. Therefore/ if the two moving picture shows gave
the same program, he would only go to one, whereas if they
had different programs, many patrons go to both.

Q. What is meant by special feature films? A. At first,
all the films made, or practically all of them, were in one
reel. Then, beginning, I think, early in 1912, and follow- 9

ing the lead of the European producers, American : pro¬
ducers began to make multiple reel subjects ;in two or
three reels. At first these multiple reel subjects were
generally a single reel subject stretched out to’ tw'o reels

by putting in: superfluous scenes, or lengthening out ncces-
D sary scenes, but later on the character of the subjects

began to justify the length, nnd they became quite popular.
These at the time, were called special feature subjects, and
they were put out to the exhibitor at an extra price, but
afterwards they came to be included in the regular pro¬
gram, ns part of the regular output, and these are not called
special feature subjects any more. At the present time, a
special feature subject is a subject generally of sufficient
interest to make a special appeal to the patrons of a
theatre, and preferably of sufficient interest to permit the
theatre to raise its price of admission. It may be only a
single reel, but that reel might possess extraordinary in¬
terest, as, for example, views of some person very diffi¬
cult to photograph, like the German Emperor, or possibly
scenes of an actual battlefield, from the late Balkan War.
A special feature subject at the present time is also one
of from four reels or more in length, specially finely made,
and preferably with some well known stars in it, as for
example, “Quo Vadis.”

Q. Mr. Dyer, I show you here, the manuscript of a mo¬
tion picture play, or scenario, entitled; “Agnes,” and will
ask you whether that is fairly illustrative of the better
class of motion picture drama, as now’ shown on the mo¬
tion picture stage? A. Yes, I would consider this the
scenario of a special feature film.

Q. I do not want to encumber the record by offering
that in evidence, but I w'ould ask you to describe, for the
purposes of the record, just wliat that scenario is. Wlmt
it comprises. . .

Mr. Grosvhnou : Has this been gotten out by any¬
body?

The Witness: The Vitagraph Company.

; • Mr. Grosvhnou : Then it has already been pub-

($ Halted?

.The Witness: It has been made, but it has not been
released ns yet. Or at least, it is undergoing production
at the present time. It has not been finished.

Frank L. Dyer, Direct Examination.

The Witness : Not that I know of.

Frank L. Dyer, Direct Examination. 1033

The Witness: My company is not . interested in the 1
production of plays.

Q. Will you proceed? A; The scenario or play is, in
four parts, each part intended to occnpy a reel of a thou¬
sand feet. At the beginning of each part, is a brief synop¬
sis of the action, or story, to lie told, so ns to give the
director a general idea of the plot he is expected to portray.
Then follows the cast of characters, so that the director will
know how many actors to assign to the play, and the parts
they are to take. Then follows a list of props, so that he
may he advised as to what to look out for in connection
with this particular detail. Then follows a list of the
scenes. On the first reel of this picture, there are twenty-
eight scenes, which, of course, would lie impossible with a
regular theatrical performance, but becomes possible on
account of the extreme flexibility of the motion picture play.
Altogether there are sixteen sets in which these twenty-eight
scenes take place. For instance, one set represents the
library in the Belgrndin home, in which eight of the scenes
take place. Following this is a description of the action
to be portrayed by each actor in eacli of the scenes, and
from time to time certain words appear, which the actors
are required to speak. For instance, in the fourth scene,
the mother meeting her daughter, says, “Wherever have you
been?” In the seventh scene, Agnes' says, “Wasn’t it splen¬
did?” And so on. The other parts are of the same gen¬
eral character, and I need not specifically refer to them, .:
except to call attention to the fact that for the second reel
one of the properties required is a steam yacht, which, of
course, could not possibly be used on the regular stage.
Altogether, this play required about sixty pages of type¬
writing, merely for the stage directions to the director.

Mr. Grosvenoii: ' I want to ask one or two ques¬
tions for the purpose of making objection.. You did
not get up this scennrio, and it was not gotten up by
your company, was it?

Mr. GnosvENoa: I object to all this testimony
about this scennrio, the witness not being properly
qualified.

Mr. Caldwell: My question was whether that
was fairly representative of the better class of mo¬
tion pictures in vogue today, and lie said that it
was. He is the executive head of the General Film
Company, one of the largest distributors of motion
picture plays to theatres, and is in direct touch
with the exhibiting thentres, and, I think, is there¬
fore qualified to say whether this is a fairly repre¬
sentative motion picture drama.

Mr. GttOSVENOa: I object to all this testimony ns.

Ily Mr. Caldwell:

Q. Mr. Dyer, the General' Film Company deals in pro¬
jecting machines, does it not? A. Yes, sir, it acts as dealer
for most of the standard makes of projecting machines.

Q. What percentage of the revenues of the General
Film Company, gross revenues, is derived from the sale of
projecting machines, as compared with its revenues from the
distribution of motion pictures? I am not asking you
for exact figures, but approximately? A. Probaly less
than \ two per cent.

Q. Then the projecting machine business is a negligible
quantity as compared to the gross volume of your business,
is it not? A. Yes, sir.

Q. It is merely incidental, is. it not, to your main
business, that is, of supplying motion picture dramas to
public theatres? A. Yes. We carry a line of machines so
ns to make sales when customers come into our exchanges,
largely ns -a matter of accommodation to them. Generally

1034

Frank L. Dyer, Direct Exam

in every locnlity where we have a branch, there are other
dealers in machines who make quite extensive selling ef- ^

forts, to dispose of them.

Q. There is only one of the defendants in this case
that either makes or sell projecting machines, isn’t that
true? A. Either makes or sells?

Q. Makes or sells projecting machines. A. The Gen¬
eral Film Company sell.

Q. I mean now, of the so-called licensed manufacturers
or producers. A. Yes, sir. The Edison Company is the
only concern that makes or sells projecting machines.

Q. While you were connected with the Edison Com¬
pany, was there any agreement or understanding with any
other manufacturer of projecting machines as to the
prices for machines? A. No, sir.

Mr. GitosVENon: I think that question should be
made more definite as to time.

Mr. Caldwell : The question was, while he was
connected with the Edison Company.

By Mr. Caldwell :

Q. And at wlmt time were yon connected with the
Edison Company, Mr. Dyer? A. From April 1st, 1903,
to December, 1912.

Q. Was any price of projecting machines ever set by
the Edison Company, as a result of the license agreement
with the Patents Company, or as a result of any conference,
agreement or understanding with anyone outside of the
Edison Company? A. No, sir. The only thing done by
the Edison (.Company as a result of the license agreement
was to withdraw a very cheap machine, known as the
“Universal,” which it was selling for $75, and which was
not a popular machine. It ivas a very cheap machine, and
its sales would have been discontinued anyway, even if the
license had not included the restriction requiring us to
withdraw it. The art had developed beyond that type of ^

machine, in fact, the art is developing now, I think, to- ™

■wards better and better machines, and I presume the future
will see more expensive machines than the past. The cost
of a machine is very small, compared to the other invest¬
ments that the theatre has to make, and the perfect opera-

(

Frank L. Dyer, Direct Examination. 1035

tion of a machine is a very important factor in the success *
of a show, so that it would be poor economy for a theatre
to economize by putting in u cheap machine.

Q. State what connection you had with the formation of
the General .Filin Company. A. I did not have a very
active connection with the formation of the General Filin
Company, except to discuss the question from time to time
with the several licensees, when we wore considering the
possibility of starting a distributing concern. This was
shortly before the company wus actually founded. I was
quite opposed to the plan of starting a concern that would
compete with our customers, because I was afraid that ■
we would alienate their support and drive them away from
us. I had had some experience along this very line in
the phonograph business. The phonograph business, as I
said yesterday, at the beginning of the Edison licensee ar¬
rangement, was larger than the combined business of nil
the motion picture producers, that is to say, the National
Phonograph Company was doing a larger business than all
the motion picture producers who were licensed, and that
was my principal work, looking after the affairs of that
concern. Now, the National Phonograph Company had g
been operating under licenses in connection with phono¬
graphs and records, and lmd licensed jobbers nnd dealers in
very much the same way as the licensees in this ense, nnd
we had about thirteen thousand dealers who were licensed.

We did all of our distributing through independent jobbers,
and those jobbers in turn dealt with tlie dealers, and it had
always been an axiom with the Edison Company, that it
must not in any way interfere or compete with their cus¬
tomers, so as to always retain them, and have their sup- .

Mr. GnosvENon: And by tlie customers i
other line of business, you mean the rent!
changes?

The W:

1630 Frank L. Dyer, Direct Examination.

Mr. Grosvenor: Thank you.

A. (continuing) : The Columbia Phonograph Company
was a competitor of the National Phonograph Company,
and in addition to being a manufacturer of phonographs
and records, they tried to deal through jobbers, and at
the same time established stores all over the country, from
which they made wholesale and retail sales, and they were
not able to build up very much of a business, because the
dealers and jobbers would not patronize them, because they
felt that they were interfering in their fields, and we
were able to build up a very large business by dealing with
the jobbers in this way. So that I was opposed to the
plan of starting tills exchange, and agreed to it only after
having been convinced that it was a commercial necessity
to do so, and after the plan was approved of, the gradual
carrying out of the plan was turned over to Mr. Kennedy,
who started the company and put it on its feet. He seemed
to be perfectly willing to do this, and as far as I was con¬
cerned, I was entirely willing to let him undertake the
work, so that my connection with the company was not
any further than to approve the plan, after having dis¬
cussed it with the several manufacturers, and co-operating
with them as loyally as I could.

By Mr. Caldwell :

Q. Do you know whether the other licensed manufac¬
turers and importers, or any of them, entered into this
plan with reluctance?

Mr.' Grosvbnob : I object to that as calling for
improper testimony. The way to prove any such
tiling, of course, is to call these other manufacturers
or producers, and not to ask about discussions.

By Mr. Caldwell:

Q. You may answer the question, yes or no. A. Yes. 9

That seemed to be the opinions of most of them. .

Q. Did you have any discussions with any of them on
. the subject? A. Oh, yes. My answer was based upon what
I had gathered from my discussions with them. They had
about the same views that I had, and I think they went.into

Frank L. Dyer, Direct Examination. 1637

the plan with great reluctance, and with the feeling that
0 the chances of failure were probably much greater than the

chances of success.

Q. Was it started more or less as an experiment? A.
Why, yes, in the sense that the chances of a failure seemed
to be greater than the chances of success, I would call it
an experiment.

Q. Did any of the manufacturers assign any mason for
their reluctance to enter the exchange business?

Mr. Guosvhnor : I object to that as calling for
hearsay.

A. Yes, I have already explained that we were dealing
with a large number of exchanges, and that was the prin¬
cipal reason for the feeling of relnctnuce on the part of
the several producers that if they should begin to compete
with their customers, they might alienate their support.

Q. And did they fear a loss of market in the leasing
of their film? A. That would naturally be the result, yes,
sir. That is why they were afraid; afraid it would hurt the
business.

Q. Was it supposed at. the time that any profits that
they might make in the exchange business would offset
possible or probable losses in their leasing of film? A. I
think they were all hopeful that some profit might be made
in the exchange business, but I do not think they felt very
sure about it. But of course, their idea was, or at least
my idea was, if any profits were made, they would offset
to a certain extent any loss that we might incur by losing
the support of the customers that we were supplying with
film.

Q. The petitioner sought to show in .this case that the
organizers of the General Film Company, prior to its for¬
mation, made an estimate of the value of all licensed ex¬
changes in the country, and that a schedule of prices was
prepared, which they would lie willing to pay for these
V exchanges, and that the General Film Company at its in¬
ception, was formed for the purpose of acquiring all of
these exchanges. Do you know anything about any such
estimate or schedule? A. No, sir, I do not.

Q. Was it the purpose of the General Film Company at,
the time of its formation, or even shortly after its forma-

1038 Frank L. Dyer, Direct Examination.

tion to acquire all the existing rental exchanges? A. No,

f • ~»5P7

for "thc^ licensed lilm that could be started in any terri¬
tories where the conditions seemed to be d“”'

szzsx irssws a-*.'?- - -i

,n u j- - “i” r-r

,a™ 'by “W olher o»tar or HD «■ »« ®-"l ™»
Company to any exchange that if it refused to sell its
HE? its license would he cancelled by the Motion Pic

“g'SKST’-iK'- n -

your knowledge, did any other officer of the Patents Com-
pany ever make siicli a threat? A. >>o, sn . m

P O Did you, or did, to your knowledge, any other offi-
cer agent oCreprcsentative of the General Film Company
state fo any exchange owner, officer, agent or ^P^n™
of any exchange, that if such exchange did not sell mit to
the General Film Company, the General Film Company
would establish a competing branch? A. JNo, sir.

Q What is it, Mr. Dyer, that regulates the cost, of Ben¬
in to the exhibitor? A. The film distribution business is
subject to so many changes and variations that it is not
possible to make any price of service on any percentage of
post as is the case with standard articles, and particularly
articles where the depreciation is slight. The expense to
. the exchange, as I have already stated, is also subject to
4 great variations, due to the periods of idleness in the work¬
ing of the film, and it is the object of every exchange to
try to keep these periods as far apart as possible. Ordi- •
narily the price of service is the best price we can get, and
the best price the exhibitor is willing to pay for the goods
we sell him. In every locality where we are. located, we
ore subjected to competition of other exchanges,, so that
these prices are strictly competitive prices. I might say
that" considering the total business of the General Film
Company, it is conducted on a basis of about twelve per

Frank L. Dyer, Direct Examination. ir>30

cent for general expense, that is to say/ tlie general ex- 1
penses of the company amount to about twelve per cent, of
fts "ross receipts, which I think is not unduly high fot a
concern of this kind, especially when the speculative fac¬
tors are considered. Its profits are about ten per cent, o
Us cross sales, which I think is also a reasonable pioftt.
Thc8film business in this country is a very highly compeH-
tive business. It has been estimated that the entire i
ceipts of the theatres amount to about "hJ
fifty millions of dollars per year, and on this basis ti e
cost of the service averages less than ten pc cent.,
to say, the theatres on an average pay ten per cent, of the r
gross* receipts for the shows that bring them in all t o
money they get. In the regular theatrical business, the
percentageygegnerally varies from forty toseventyflvep
cent, of the gross receipts, or from foui to seven time
much as in the motion picture business.

Q Do you know whether or not the cost of service o
the exhibitor was increased after the formation of the
General Film Company? A. No, sir.

Q. Do yon mean by that that you do not know, or that
it lias not been increased? A. Our records show that
the average price per customer is almost exactly the same
now ns it was in 1911, and since that time a great many
large new theatres have been built, that pay a great deal
for" service, ho that I am certain that for the urge bulk

ni.niuv no tier cent of our customers, there 1ms been a
verj substantial reduction in the average serrice charge.
More than this, the quality of the motion picture plays we
hava been supplying to these theatres 1ms very materially
increased™ serthat theatres are getting much greater value
for their money. We have also increased the number of
plays produced per week, handled by the General Fi m
Company, so that the price of service, per release 1ms been
very greatly reduced. . We are making more subjects for
ou? customers, now, than ever before, without increasing

t,ie o'wiio is it that fixes the price of service to the ex-
liibitor, the branch manager of the General Film Company, .
or the main office of the General .Film Company. A- The
price of service is fixed as a matter of bargain an l sale, h^
tween the branch manager and customer. Tie haie litt e
or no control over this. With a business of the size of the

1640 Frank. L. Dyer, Direct Examination.

General Film Company, it is necessary that the branch
manager should have considerable latitude in determining
questions of price, because it these questions were referrd
to the home office, the complications would be interminable.
The branch managers run their branches with ns little
trouble and. dictation from the home office as possible. In
fact, the only dictation they receive from the home office
is in connection witli matters of policy. Each branch
manager is running his exchange ns far as lie can, prac¬
tically as an independent business, and under competitive
conditions, is making the best showing lie cnn for his
branch.

Q. What is the practice of the various branches in pre¬
paring a program for its customers? A.- Ordinarily the
programs are prepared by the branch manager, or rather,
by the booker or bookers, having in mind the service con¬
tracted for. If, however,, the program of any particular
day is not properly balanced, that is to say, if it con¬
tains, for instance, three dramas, the theatre generally
asks to. have it changed, by substituting a comedy for
one of the dramas. In some of the branches, we have book¬
ing systems that give to the theatres certain definite makes
of films on certain definite dates, and while this gives
variety in connection with brands or makes, it does not give
variety in connection with subjects, and here again, we
have to make adjustments all the time to balance np pro¬
grams. This is one of the great problems of the branch
manager, trying to satisfy so many customers. In some
localities, such as Boston, the theatres indicate to the
branch manager a list of films from which they wish to
have their programs, selected. That is to say, if a theatre
is entitled to three reels on a given day, he will give the
branch manager a list of six subjects, and ask to have the
three reels selected out of the six subjects suggested by
the exhibitor, and this is done as much as possible. Then,
in almost every branch, there nre a few customers who
take a great deal of interest in the selection of their pro¬
grams, and these people can be seen hanging around the
booker’s desk, trying to pick out certain films that they
want, but in a very large majority of cases, the programs
are selected by the bookers, who are skilful men, and who
try their best to give to the theatres a ' satisfactory, inter-

Fuank.L. Dyer, Direct Examination; 1041

esting, and well-balanced program. And they try as far
as they can to carry out the wishes of the exhibitors in
connection with the character of the reels furnished to the
exhibitor. Some exhibitors, for example, like to have edu¬
cational films, and we try to let them hnve them.

Q. Is it your experience that for the most part the
exhibitor prefers the branch manager to make up the pro¬
gram for him? A. Yes, I think so. The exhibitor does
not pay very much attention to this question, and he has
been getting satisfactory service, and knows the programs
furnished by the branch manager will be acceptable, and he
is perfectly willing to be relieved of the duty of picking
out his programs himself. We do not have many coin-
plaints, when you consider the large number of theutres that
we supply service to— the complaints are really, very small.

Q. Is it within the power of the General Film Company
to satisfy the wishes of an exhibitor with respect to the
choice of .program, to a greater extent than when there
were many licensed exchanges in the field? A. Yes, I H.h.v
that is so, because the General Film Company has a much
greater variety of films to make the selections from than
would be the case with a large number of small units.

Q. Do you happen to know whether the same system of
preparation of program by the exchange is followed by the
unlicensed exchanges in their dealings with their custom¬
ers. A. Yes, sir, the General Film Company, having point¬
ed out the way to do the business in a businesslike manner,
has been followed by its competitors.

Q. Was this selection of program by the exchange, a
trade custom more or less followed even prior to the
Edison licensing arrangement? A. Yes, sir, it all »rew
out of the early conditions, where the demand for film bv
exhibitors was so great that they took anything they could
get. Anything that was a picture was sufficient for their
purpose, because the pictures were looked upon solely ou
the grounds of novelty, and, I presume, the continuance of
the branch mnnager in sending out programs is simply an
outgrowth of this early custom. That is to say, the the¬
atres never did select the programs, and do so now as I
said, only in a very few cases. ’

,Q- )¥ho ia U that determines what pictures shall be

ordered for each branch of the General Film Company’ A

The branch manager of each branch has the unlimited dis-

lC‘t2 Frank U Dyer, Direct Examination.

cretion of ordering suclt pictures as in Ms judgment may
meet the public demand in the territory supplied by him.
In other words, so far as buying the Mm is concerned, the
branch manager is independent of the home office, and acts
exactly with the same freedom that he would have if lie
owned the business himself.

Q. If the branch manager finds that there is a greater
demand in his territory for pictures turned put by n cer¬
tain licensed producer, than there is of the pictures of other
licensed producers, is he at liberty to order the pictures ,
that ore most popular with his patrons, or is lie compelled
to take the pictures of all of the licensed producers? A.
He is not only at liberty to order these pictures that are
demanded, but lie is expected to do so, and as a result of
this independence of action on the part of the branch man¬
agers, the orders for the several pictures of the licensed
manufacturers vary as much ns three hundred per cent, or
more; that is to say, some reels will sell to the extent of
three hundred per cent, more than other reels. _

Q. Have you stated why the simultaneous service by
two or more' licensed exchanges in the same territory pre¬
vents the theatre from advertising its program in advance?
A. Yes, sir, I have explained that. The old practice was
fnr the theatres to conceal the programs, so that their

try to get us to give him the particular film that the other
theatre lias advertised, and they seem to have great diffi¬
culty in understanding why we should refuse to let them

ten up little program that will give all the shows
atire week, as I have stated before. Then, it is
non for theatres to get posters ill advance of the
lint are coining on later, and put these posters in
lies, so that their patrons will see what to expect
Then, the theatres are getting in the way' of

advertising in the daily papers to a greater or less extent,
and it is quite a common tiling for theatres to make use of
heralds or hand bills, announcing the giving of a certain
motion picture play on a certain day, and in the case of
the large theatres, bill-posting is quite extensively used,
just like the bill-posting in connection with a regular dra¬
matic performance.

Q. Does the General Film Company supply these post¬
ers to any of its customers? What is the practice in Unit
regard ? A. The posters are printed by regular lithograph¬
ing concerns, and sold generally to people who want them,
but we maintain in a great many of our branches, poster
departments, where we keep a supply of posters, which we
rent or sell to exhibitors either simultaneously with the
films, or beforehand, so that they can announce the films
in advance. Then, in some places there are separate poster
companies that maintain offices in the neighborhood of our
branches, and who deal with the poster business exclu-
' sively, or compete with us. In Chicago, a separate poster
company maintains quarters in all three of our branches,
and docs the entire poster business for those branches. I
think, to a limited extent, some of the larger theatres obtain
posters direct from the lithographers who make them.

Q. Do the producers of the pictures sometimes supply
posters? A. .Not ordinarily, but I think in the case of
“From the. Manger to the Cross," the Kalem Company did.

Q. Do they supply the cuts to the lithographer from
which the lithographer makes the poster? A. Certainly.
The producer of the play furnishes the necessary plioto-
. graphs to the lithographer, in order that the lithographer
■ may make up the posters of the various sizes.

Q. Whatever business the General Film Company does
in posters is merely a matter of convenience, is it not, to
its customers? A. Very largely so. It is a very small mat¬
ter. In fact, it generally causes more trouble than it is
worth, but it is desirable to have the posters for the mis-,
torners, so us to let them get them from our branches if
they want them.

1044 Frank L. Dyer, Direct Examination.

defendants to please produce, when Mr. Marvin • ap¬
pears for cross examination, all letters written by
the Patents Company in response to the letters, ad¬
dressed to the Patents Company, and which were
introduced by counsel for the defendants during
their direct examination of Mr. Marvin, these letters
being from various exhibitors and rental exchanges,
the production of the letters written by the Patents
Company in response to the other letters being
necessary in order that a full and proper cross ex¬
amination may be made in regnrd to the letters
which have already been introduced by the defend¬
ants.

Mr. Kingsley: I have understood right along
that you were not going to cross examine Mr. Marvin
until he was through. Now, do yon wish him pro¬
duced within a day or two for cross examination?

Mr. Ghosvenor: No; the purpose of giving that
notice is that you will have those letters ready when
he does appear for cross examination. That is, I
want to have it on the record that I have notified
you to keep and retain and preserve and produce
those letters.

Mr. Kingsley: When do yon want to cross
examine him? In a few days, or at the close of
his testimony?

Mr. Grosvenob: I should rather postpone the
cross examination until you have closed, but if you
have not any witness to go on tomorrow, in order to
save time, I will start with Mr. Marvin.

Mr. Kingsley: We will have a witness tomor-

Wliereupon, at 4:40 P. M., on this 11th day of Novem¬
ber, 1913, the hearings are adjourned until Wednesday,
November 12th, 1913, at 10:30 A. M., at the Hotel Man¬
hattan, New York City.

EVIDENCE. 1015

pISTRICT COURT OF THE UNITED STATES
Fob tub Eastern District op Pennsylvania.

United States op America,

Petitioner,

Motion Picture Patents Co. and others,
Defendants.

New York City, November 12, 1913.

The hearing was resumed pursuant to adjournment at
10:30 o’clock A. M., November 12, 1913, at Room 159, Man¬
hattan Hotel, New York City.

Present on behalf of the Petitioner, Hon. Edwin
1>. Ghosvbnor, Special Assistant to the Attor¬
ney General.

J. R. Darling, Esq., Special Agent
Present also, Messrs. Charles F. Kingsley, George
It Willis and Fred R. Williams, appearing
for Motion Picture Patents Company, Bio-
' . . graph Company, Jeremiah .T. Kennedy, Harry

N. Marvin arid A mint Moving Picture Com¬
pany.

J. 11. Caldwell, appearing for William Pelaer,
General Film Company, Thomas A. Edison,
, Juc., Knlem Company, Inc., Pathe Freres,
Frank b. Dyer, Samuel Long and J. A. Iterst.
! • Mr. IIhnry Melville, attorney for George Kleine,

Essanay Film Manufacturing Company, Selig
Polyscope. George K. Spoor and W. N. Selig.

Mr. James J. Allen, appearing for Vitagrnpli
1 Company of America, and Albert E. Smith.

1040 Frank L. Dyer, Direct Examination.

1 ' Thereupon PRANK L. DYE1I resumed the stand.

Direct examiimtiou eoutinued by Mr. OAUWKi.ii :

Q. What is the effect on Him of the sprocket holes being
torn or enlarged? A. If the sprocket holes are torn on both
sides of the film, the film will not feed through the project¬
ing muchine, and there will be danger of its being ignited.

If the sprocket holes are torn on one side only of the film,
it is likely to be fed irregularly through the projecting
machine, and ride up on the sprocket teeth, so as to thereby
o stop the feeding movement. If the sprocket holes are en¬
larged, the successive pictures do not register accurately
in the projecting machine, and produce jumping or irregu¬
lar projections on the screen. Pictures that are projected
on the screen, as is well known, are very much enlarged,
so that any. defect in the machine is correspondingly ex¬
aggerated.

Q. Could you state approximately the extent to which
the picture on the film is magnified on the screen? A.
About ten thousand times.

Q. So tliat the slightest variation in the correct posi-
8 tion of the film would result in a very poor exhibition? A.
Yes, sir.

Q. What is the effect of the film being scratched? A.
A scratched film is one in which longitudinal scorings
through them cut through the gelatine of the emulsion
down to the celluloid base. Light is projected through these
scratches, and interferes very materially with the projec¬
tion. Where the scratch is considerable, as is the case with
an old film, the repeated passing of the scratches across the
eye give somewhat the appearance of a violent storm of
rain, and these pictures were therefore called “rain storms.”
4 I recall seeing a play in New York written by my consin,.
Mrs. Kate Dougins Wiggin, called “Rebecca of Snnnybrook
Farm,” where this defect was utilised to produce the effect
of ruin on the stage.

Q. What is the effect on the film of a break or tear
necessitating splicing? A. It produces a hiatus' in the re¬
production. A foot of film, roughly speaking, corresponds
to about one second of time. Therefore, if a foot of the film
is cut out, 'a second of time is lost. This is very frequently
observed in motion pictures where, for example, a man is

- . ■ . . i ' - ‘ . .

pc <•*.

o m

Frank L. Dyer, Direct Examination. Ml"

shown walking across tlm scene, and instantaneously he 1
appears several feet in advance. This is called a “jump,”
and is the result of a splicing requiring the cutting out of
a portion of thc'film.

Q. Does it often happen that the break or tear is longer
than a foot? A. Oh, yes. I simply mentioned a foot to
indicate the period of time that would be involved. Some¬
times several feet would be taken out.

Q. Docs it sometimes happen that a picture after a
considerable usage loses as much as ten or twenty per cent,
of its footage? A. That might happen in special cases, but 0
I think that is rather a high loss.

Q. Which would you consider high, ten or twenty? A.

I would consider both figures high. I am now speaking, of
course, of averages, not of special cases.

Q. You have stated that some of the releases of the li¬
censed producers consist of educational and scientific pic¬
tures. In what places are these pictures exhibited other
than in the regular motion picture theatres? A. I think
all of the manufacturers put out scientific and educational
pictures from time to time, and that these pictures are not
limited only to certain producers. In addition to the g

regular motion picture theatres these pictures are shown in
private exhibitions, in clubs, various penal institutions, in¬
sane asylums, and poor bouses. We maintain quite inti¬
mate relations with the Navy Department, and supply
these and other films to a great many of the American
warships. We also supply films for use at the various
army posts throughout the country.

Q. By “we” you mean the General Film Company? A.

I mean the General Film Company. And it. is getting to
he quite a common thing now for churches to use mo¬
tion pictures at their social meetings, and in several eases 4
, ministers have used motion pictures in connection with their
sermons.

- Q. Are they supplied also to public schools? A. Yes,
we also supply pictures to public schools, and to colleges,
and other educational institutions.

Q. Does the General Film Company maintain an educa¬
tional department for the purpose of supplying pictures to
public schools, and educational institutions? A. Yes, we
maintain an educational department for this purpose, and
it is the practice, at least of some of our branches, to

1G4S Frank L. .Dyer, Direct Exajiixatiox.

maintain au educational catalogue of these films that nrc
supplied to people other tluiu the regular theatres.

Q. Mr. Dyer, I would like for you to look at Defend¬
ants’ Exhibit No. 28, at page 1117 of the record, being a
letter addressed to the Motion Picture Patents Company,
by the Theatre Film Service Company, of San Francisco.

It is signed “Theatre Film Service Company, per A. .T.
Olnpham,” who was a witness for the petitioner . in this
case, and in which letter he calls the attention of the Pat¬
ents Company to the matter of returning old dims, and
states that it has been the experience of that exchange (the
Theatre Film Service Compnny) that at least twenty-five
per cent, of a film is lost during the seven months of its
lease, and in many instances it has been even greater than
• this, and he goes on to say that “we figured that we are
returning about three reels for every two which we lease,
and it strikes us particularly hard in view of the fact that
we have no old stock on hand, other than that which is
being constantly used,” etc. Just rend that letter, will
you? A. Yes (examining letter), I have read the letter.

Q. Now, in view of the claim by that exchange that
twenty-five per cent, of the footage is lost, would you say
that ten or twenty per cent, was high after a film has itecii
in constant use for a long period of time? A. Yes, I still
think that percentage is high under the present conditions.
My answer was based upon my observation of general
averages. It might be .that some particular exchange was
using its. films harder than others, or that some subjects
were being used to a much greater extent than others, so
that these large percentages of waste might be present. I
. don’t think that is true at the present time.

Q. The character or condition of the projecting machine
lias something to do also, has it not, with the effect on the .
film, tearing it, etc.? A. Yes, that, and the skill with
which the machine is operated.

Q. During the period of the Edison license, and also
since the organization of the Motion Picture Patents Com¬
pany, have you ever known of any demand on the part of
a licensed exchange to accumulate a library of so-cnlled
educational or scientific subjects?/ Have you ever heard of
such a demand? A. I am not able to speak as to the con¬
ditions at the time of the Edison licenses, but the. General
Film Company has accumulated a library of educational

Frank L. Dyer, Direct Examination. 1G49

and scientific films in its educational department, and I 1
think this library was the result of a certain demand, or of,
at least, certain opportunities to do business. I know also,
in the cases of our Indianapolis and Wabash Avenue
branches, the managers have sat aside scientific and edu¬
cational films as a nucleus of a library, and issue their
own little educational catalogues for the purpose of develop¬
ing this business. The educational business, however, is
very small compared with the amusement business, and it
is not an entirely satisfactory business, because educational
bodies are notoriously averse to paying much money for
anything. They have to pay for the films, and there is no ■*
way of getting any return from the films, as is the case with
the amusement side of the business, and, therefore, in the
case of educational films, the expense of the service is kept
as low as possible.

Q. While yon were President of the Patents Company,
did you ever hear of a complaint on the part of any licensed
exchange that the provisions of the license exchange agree¬
ment requiring the return of film operated to prevent the
accumulation of such a library? A. No, sir; I never did.

Q. In point of fact does it have such an effect? A. No, g
sir, in view of the comparatively small number of educa¬
tional and scientific films with respect to. the entire output.

Q. Explain the method of censoring motion pictures?

A. So far as licensed films are concerned all the releases of
the licensed producers are run off at an exhibition room
of . the Patents Company, I think, on four days of every
week, before a body of censors, generally comprising men
and women of various numbers; and the censors notify the
. manufacturers if any particular picture is objected in whole,
or, if they object only to certain parts of the picture, they
point out the parts that are objected.. to, ..and they also 4
make suggestions before changing the picture in any. re¬
spect, that may be objectionable to them, and those sugges¬
tions of the censors ate; carried out by the manufacturers.
That, has to do, of course, with the National Board of
Censors. There' are other censorships , in the country,- but
this; National Board is the important body.

Q. Can you state any benefits or' advantages resulting
to the public from the formation and the operation of the
Patents Company? A. Yes. I think the Patents Company
■was of public benefit inasmuch as it resulted in the

1650 Frank L. Dyer, Direct Examination.

1 elimination of endless, or apparently endless litigation, on
tlie subject of patents. It was of benefit to the public, be¬
cause as a result of tlie ending the patent litigation, and the
bringing about of a condition of quietude, the manufac¬
turers were free to expand and enlarge their plants, im¬
prove the quality of the motion picture plays, and increase
the number of subjects released. This assured men of
capital throughout the country that there would be on
available supply of motion pictures for use in the theatres,,
and, therefore, a great number of large, expensive, and
well ventilated theatres were built, some of which were of

2 advantage to the public, as these theatres gave the public
the opportunity of seeing good, clean, high class, instructive
exhibitions under favorable surroundings at an admission
price of from five to ten cents. Then, also, the formation of
the Patents Company brought about the so-called Board
of Censors, and the result of this Board of Censorship was
the elimination of objectionable pictures, and a very sub¬
stantial increase in the tone of the pictures. Of course, the
licensed producers did not adopt tlie suggestions of the Na¬
tional Board of Censorship for altogether altruistic ren-

g sons, because it was asking a good deal to expect them to
agree with a non-official outside board who have the right
to condemn or direct the curtailment of pictures that may
have cost thousands of dollars to make, but we felt that it
was important that the public should feel that, the pictures
were being independently and honestly censored, so that
they would have confidence in our productions. We nlso
• were afraid that unless Some kind of censorship wns en¬
couraged in which the public would have confidence, that
various local censorship boards would spring up all over
the country, and interfere with the development of the

4 business. In recent months several of these boards have'
developed, and they necessarily impose a tax on the busi¬
ness, which the public has to pay. The Patents Company
also was of importance to the public because it brought the
best, and at the time substantially all the producers of mo¬
tion pictures together, in a spirit of friendly co-operation,
and the difficulties and troubles encountered by one pro-,
ducer could be more readily remedied by discussing these
problems with his competitors than would have been pos¬
sible if these troubles and difficulties had to he worked out
independently of each other. / Also, by the bringing about

Frank L. Dyer, Direct Examination. 1651

of tliis feeling and friendly co-operation among the pro¬
ducers, without in any way affecting the keenness of com¬
petitive relations between them, they, were able to bring
co-operative pressure to bear on the Eastman Kodak Com¬
pany to improve the quality of the film, and reduce the
price, and both of these factors were of public benefit. If
there hud not been this co-operation, tlie Eastman Kodak
Company could have kept ench producer off at arm’s length,
and probably this development would have been very slow.
The Patents Company nlso were the first, or, at least, one
of the first, to realize the necessity of doing away with the
showing of pictures in absolutely dark theatres, and it
maintained an exhibit at the Patents Company for a long
time demonstrating how pictures could be shown in lighted
auditoriums, and this work on our part wns taken up by
the trade papers, and the theatres throughout the coun¬
try were convinced of the advisability of this reform, so
that at tlie present time, I think, that all, without excep¬
tion, of the motion picture theatres of the country are now
showing pictures under reasonably good conditions of light.
At least, wo hear no further complaints about immoral
practices that at one time were being constantly brought to
our attention.

Q. Can you state any benefits or advantages to the ex¬
hibiting theatres resulting from the formation and opera¬
tion of the Patents Company? A. Yes. Without the Pat¬
ents Company, and under the conditions that existed, for
example, at the time of the Edison licenses, every theatre
that showed motion pictures necessarily infringed the pat¬
ents of the Biogrnpli and Annat Companies, and could have
been sued for such . infringement. The Patents Company
gave these theatres immunity from patent suits. The rapid
development of the business, after the_Patents Company
was formed, owing to the fact that the producers were
relieved of the doubts, concerning patent infringement, re¬
sulted in the making of more and better films, so that the
theatres, therefore, directly prospered by reason of that fact,
and as I stated in my previous answer, a great deal of new
capital was invested in the theatrical business and new
theatres were built. •

Q. Can you state . any benefits or. advantages to the
public resulting from the formation and operation of the
General Film Company? A. The formation of the General

1052 Frank L. Dyeii, Direct Examination.

. 1 Film Company was of benefit to the public in a good many
ways, at least, that is my very firm belief. It provided at
. its branches a great assortment of motion picture plays, so
that the theatres that the public patronised wore able to
put out better and more varied programs. It inaugurated
methods of inspecting and cleaning the films, which result¬
ed in much better, clearer projection on the screen. It en¬
forced the requirement for the return of old film, so that
the character of the exhibitions in this respect was im¬
proved. It did away absolutely with conflicting programs,
so that the public could go from one motion picture the-

i atre to another and see a different program in each house.

It minimized the repeating, so that the public would not
see probably more than one reel in any program that they
may have seen before, and in many localities, they would
not even see one reel that had been repeated. It enabled
the theatres to have their programs laid out in advance, so
that the theatres were able to advertise the programs, and
the public knew where they could see a certain picture in
a given territory, and on what date, and they went to
the motion picture show, therefore, with the same degree

g of certainty that they went to the ordinary theatrical per¬
formance, whereas, under the old conditions, the motion
picture entertainment was largely in the manner of a sur¬
prise party. And the General Film Company, by reason
of its businesslike methods, has been fairly consistent in
supplying its .programs to . the theatres as contracted for,
so that the public has not been disappointed in failing to
see plays that may have been advertised.

Q. Has there been any tendency in recent years, on the
part of unlicensed competitors, to turn out glaring and
sensational posters? A. Yes. That is quite true.

4 Q. Did the General Film Company countenance any- -
such movement? A. No. That is really another advantage
that I think can be attributed . to the General Film Com¬
pany. We have tried to restrain any pressure from the
manufacturers or producers to make glaring and vivid post- -

ers. As a matter of fact, a licensed theatre can generally be
distinguished from an unlicensed theatre, by reason of the ■-. -
character of the posters. The unlicensed posters were al¬
most always very glaring and vivid and sensational, al¬
though in this respect there has been a very decided im¬
provement recently on the part of our competitors. As a

Frank L. Dyer, Direct Examination; 1C53

matter of fact, it used to be a very common tiling to simply
get hold of a lot of glaring and vivid blood-curdling posters
® and put them out in the lobby to draw the people in, and

then have no picture that in any way related to the posters
that were being shown.

Q. Do you recall that a bulletin was ever issued by the
Motion Picture Patents Company on this subject of sensa¬
tional posters? I hand yon here a bulletin entitled, “Ex¬
hibitors’ Bulletin No. 11,” and ask you to read that. A.
Yes, this is precisely the thing that I had reference to.
Shall I read this iuto the record?

Q. No, you need not read it. You identify that us a
bulletin sent out by the Patents Company on this subject
on this date, November 21st, 1910? A. Yes, that is the date.

Mr. Caldwell: I offer it in evidence.

Tlie paper offered is received in evidence and
marked Defendant’s Exhibit No. 107, and is as fol-
. lows :

Defendants’ Exhibit No. 107. E. H.

MOTION PICTURE PATENTS COMPANY
80' Fifth Avenue
New York City

, November 21, 1910.
Your attention is directed to the following Bulletin that
was sent to Exchanges on November 7th, 1910:

“Legitimate iuotion pictures are occasionally made
the subject of adverse criticism by reason of the use
by the exhibitor of sensational and misleading post¬
ers that have been prepared without the co-operation
or knowledge of the manufacturer of the picture.
“Exchanges are notified not to supply any poster
S’ for use in connection with any motion picture except

• posters made, with the knowledge and consent of
the manufacturer or importer of the motion picture.”

From this Bulletin' you will note that Licensed Ex-

1054 Frank L. Dyeu, Direct Examination.

changes will hereafter supply only posters that properly
illustrate the motion pictures in connection with which they
are issued.

The reputation of your own theatre is likely to suffer
from the use of misleading posters, and your interests will
ho safeguarded if you use only posters that are authorized
by the makers of the pictures that yon exhibit.

MOTION PICTURE PATENTS CO.

By Mr. Caluwei.t, :

Q. Can you state any benefits and advantages to the
exhibitor, resulting from the formation and operation of the
General Film Company? A. The organization of the Gen¬
eral Film Company has been of very great advantage to
the exhibitor. First and foremost, it prevents the conflict
of programs, so that a theatre is aide to advertise its shows
legitimately and without the fear that its competitor will
run in the same show at an earlier date. This used to be
the curse of the business. Then, the General Film Com¬
pany also linudles its Aims in such a way that except in
very congested localities, repeating is minimized, and when
repeating does take place, the effort is made to keep the
repeating films back as long ns possible, so that they are
repeated in a given locality only after a considerable lapse
of time. The General Filin Company also inaugurated ef¬
fective inspection and cleaning methods that enabled the
theatre to give a better exhibition, which would be more
satisfactory to its patrons. We also are able to give service
to theatres with the same regularity as a morning news¬
paper, so that the theatres are always assured of having
their shows, and in localities where there are possibilities
of delay,- such, for example, as in the upper part of New
York State, during the Winter months, where trains are
sometimes late, and in New England, in the Winter, we
always keep on hand at each theatre — © 9

Q. (interrupting): At each theatre?, A. At each the¬
atre — a supply of reserve reels, so that the theatre will have .. ,
a show in case the regular show does not arrive. We have
been abie, or, ratheij, we have been required hy stress of

Frank C. Dynu, Dinner Examination. 1055

competition, to make the prices moderate with theatres, and
(0 % ■ have very substantially improved the variety of the pro¬

gram, and in many cases, the number of reels in - the pro¬
gram, and in all 'cases the quality of the pictures that con¬
stitute the program.

Q. Were the Edison producing and importing licenses
competing as between themselves, during the year 190S?
A. Yes, sir. They were competing on questions of quality,
and so forth, lmt there was a certain amount of co-opera¬
tion on mutters of trouble and -mechanical defects, and
factory breakdowns. For instance, if a manufacturer had
some trouble in development, instead of having to begin
experimenting to find out how his trouble could be rem¬
edied, he might find that one of his associates had encoun¬
tered the same trouble and found the remedy for that
trouble. But the competition was very active, as far ns
the business was concerned. Encli one was trying to get
ns much business as he could.

Q. At that time, what was the most popular brand of
film being exhibited in this country? In January and Feb¬
ruary, 1908? A. I think the Patlie pictures were the most
popular of them, although the Biogrnph pictures came
into vogue shortly afterwards, and have always been very
popular.

Q. Then, had Patlie at that time established, so to speak,-
a standard of good quality? A. Yes, sir. Tile Patlie pic¬
tures were the highest standard known in the art at that
time. They were pre-eminent.

' Q. And it became the effort of the other licensed pro¬
ducers to reach and surpass, if possible, that standard that
lrud been set by Patlie? A. Yes, sir, botli photographically
and in all other respects.

Q. Now, if ail tile licensees lived up to the schedule of
minimum prices 'established by the .agreement, in what re¬
spects were they competing, and how did such competition
manifest itself? A. So far ns I know, the producers did live
up to minimum prices/ Competition manifested itself be¬
tween the licensees in the form of bulk of sales of goods. If
there .was a certain minimum price, each producer would try
to put the greatest value possible into the film, and the com¬
petition was entirely along the lines of trying to sell ns many
prints of a subject ns possible. The licensees were competing
in matters of scenarios,’ they all were trying to get tile best

Frank L. Dyer, Direct Examina'

scenarios they could, and there wns a very intense competi¬
tion even at tlmt time on the question of the price of the
scenarios. Scenario writers would submit seeuarios from
one producer to another and get the best price from the one
that was willing to pay the most for it. Then there was
competition in the way of actors, each producer trying to
get the best actors, so that as a result, the price of actors has
very materially increased. When I was President of the
Edison Compuny in 1908, $50 or $75 a week was considered
a very7 good price to pay for an actor, because lie was given
employment all the year round, and was able to live with his
family, and did not have to work a t nights, the way they have
to do on the regular stage, whereas at the present time, there
are actors who receive from $500 to $1,000 a week for their
services. There was competition also on the subject of ad¬
vertising, each producer spending a great deal of money in
advertising his films in the trade papers, so as to popularize
them, and create in that way a demand by the public on the
exchanges, so us to require the exchanges to buy particular
brands of films. Then, the producers were sending men,
traveling men, around among the exchanges, urging the ex¬
changes to buy their films. Then, the various producers were
also sending people around among the various theatres to
talk up their films to tiie theatres, so that the theatres would
' try to get the exchange that wns serving the theatre with
service to buy particular makes of films and, so far as X
. know, all the methods usually adopted by competitors were
adopted by. these particular competitors, to improve their
business in the greatest possible way. Each one was trying
to get on top, and each one was trying to pull the others
down who might be above them. When I speak of pxices of
actors, I should also -include the salaries of directors, and I
think the salaries of almost all employees in the art have
increased by reason of the competitive conditions.

Q. After the formation of the Patents Company, did its
producing and importing licensees compete as between them¬
selves? A. .Yes, sir, in exactly the same way, the same thing
went on. Each one trying to do the best business possible,
and first one would go on top and then . another. They kept
this competition up. There was absolutely no understanding

Q. This competition between manufacturers, — did it con¬
tinue after the formation of the General Film Compnny?
A. Yes, sir, it goes on in exactly the same way.

Q. And is that condition true today? A. It is.

Q. This competition for high-salaried actors and for the
prodxxction of motion picture of groat, rare, nrtistic merit,
is it more active today than it ever wns at any time before?
A. Yes, sir. As an example, I had occasion a few weeks ago
to visit tile plant of the Vitagropli Company, and was very
much surprised to see that nil the leading stars drove up to
the plant in the morning each in bis own automobile with a
liveried chauffeur on the front seat.

Q. Are these licensed producers and importers in
petition with the non-licensed producers and importers, coi
monly referred to. ns independents, hut in point of fact, i
fringers? A. Yes, sir. The competition is very keen, not

fringers? A. Yes, sir. The competition is very keen, not tc
saybittei7.

Q. In whut respect does that competition show itself par
ticularly? A. You have reference now only to the producers'

Q. Yes. A. It shows itself in competition in the firs!
place for .stories that are to he made the basis of motion pic
tore plays. Each producer, whether licensed or so-called in
dependent, is trying lo gel the best plays he can to put out
The competition is very keen on the subject of actors,- and.il
an actor has been popularized by one company so as to he t
valuable acquisition, ridiculous offers are made to got him oi
her away. Competition has also manifested itself in adver
Using. Each producer is spending money to popularize his
particular make of filth. Then, all the producers send travel
ing mfen around to interest t.he exchanges in their films, nut

ing men around to intei
try to get the exchanges
same thing is done as a

e time of the Edison li(
n the part of theatres i

1059

103S Frank L. Dyer, Direct Examination.

theatres to bring pressure to hear on the exchanges to buy
that particular brand of lilms. Then, the competition, in au-
otlier sense, is manifested by the fact that if some particular
producer iinds a very desirable place to operatte in, where
the conditions are good, generally all of his competitors Hock
out to the same place and establish themselves there-m
other words, the competition is open and active, each pro-
ducer trying to sell the maximum number of prints of the
pictures he makes.

Q. Has there been any tendency in recent years ror tne
non-licensed producers and importers to unite in turning out
a program for the exhibiting theatres? A. Oh, yes, that is
the only way the business can be handled, at least, under
present conditions.

Q. How many groups of these unlicensed producers are
there? A. There are two groups. One known as the Mutual,
the other the Universal. ' , .

Q. Do you know what brands of pictures are turned out
by the Mutual? Could you enumerate them from memory?
A. I should rather not. .

Q. X show you here, a copy of the Moving Picture \\ orltl
of November 1st, 1913, and ask you to refresh your memo¬
ry by looking at that. A. The Mutual Company is allied
with the producers of the following brands, namely, Apollo,
Majestic, Tunnhauser, American, Keystone, Reliance, Bron¬
cho, Domino, Kay-Bee, and Princess; and also handles a
topical weekly called the Mutual Weekly.

Q. Many, if not all of the producers of the pictures,
which you have just enumerated, were turning these pic¬
tures out two years ago, were they not? A. Yes, sir, as I re-

A. Yes, sir.

Q. Now, will you enumerate what pictures are turned
out by the Universal Company and its allied producers? A.
The Universal group includes the following productions:
Rex Crystal, Eclair, Victor, Imp, Powers, 101-Bison,
Nestor, Joker, Frontier, and a topical weekly called the
Animated Weekly. • , ,, , ,

Q. What class of pictures are comprised m the Mutual
Weekly and the Animnted Weekly? A. Pictures of the
same general type as the Pathe Weekly handled by the

Frank L. Dyer, Direct Examination.

General Film Company, or, in other words, a weekly or
semi-weekly motion picture newspaper. It is a single
reel of film composed of short scenes of topical interest,
taken all over the world.

Q. Which of those weeklies was the first to make its ap¬
pearance? A. The Pathe Weekly. ,

Q. Then, that set the standard, did it not, that was fol¬
lowed by the others? A. Yes, sir; the others copied it.

Q. These alliances which made up these two large
groups of lion-licensed producers, were a matter of growth,
were they not? A. Yes, sir. Growth and development.

Q. Which commenced about the time of the organization
of the Patents Company, that is to say, some of the com¬
panies producing those pictures sprang up very shortly,
after the Patents Company was organized? A. About that
time, yes, sir.

Q. And they gradually formed themselves into these two
large groups of competitors? A. That is correct.

Q. They are competing against each other and against
the Genera! Film Company and the licensed producers?
A. Yes, sir, each group is trying to get as much business as
•it can, and minimize the business obtained by its competi¬
tors.

Q. About how many customers are now being served in
the United States by the General Film Company? A. In
the United States and Canada, about 7,100, ns I recall. I
think in the United States about 0,000.

Q. Do yon know approximately liow many theatres are
being served by the exchanges handling the Mutual pictures
and the Universal pictures? A. To the best of my knowl¬
edge, I believe that about the same number are handled by
both of those concerns that are handled by our concern, al¬
though they claim that they are handling more.

Mr. Grosvbnor: I want to object to the latter
part of that answer, ns to what the others claim, as
being improper.

Mr. Caldwell : Before we get through this case,
I think we will be able to show with reasonable cer¬
tainty, how many customers are being served with
the non-licensed pictures. .

Mr. Grosvbnor: I have no doubt you can, but it

1000

Examination.

Frank L. Dvkii, Direct

sliould be proved, of course, in the proper way, mid

not by this witness stating what they claim.

Q. Is tlie General Film Company in active competition
with the exchanges handling the unlicensed pictures? A.
Yes, sir. Most active competition.

Q. Can you state in what way such competition mani¬
fests itself? A. One peculiarly irritating way that com¬
petition manifests itself is that wherever we get a location
for a branch exchange at a certain place, or a certain build¬
ing, we find that our competitors try to get in the same loca¬
tion and, if possible, in the same building, and preferably
on a lower floor, so as to intercept the customers. The
competition between the. 'exchanges manifests itself in
the efforts on the part of each to get as . much business
us possible at the best possible price. Our competitors try
to take our customers away from us by offering them better
service or more reels, or a better price, and we do the
same thing ourselves. All the exchanges are competing by
means of traveling men who go around visiting various
theatres, and try to interest them in the respective pro¬
grams of the exchanges that they represent. I think in
that respect, the Mutual and Universal Companies are
more active than we arc. The competition is also manifest¬
ed by the advertisements of the three concerns, each trying
to convince the theatres that it handles the best films, and
will give the most satisfactory service. The competition
is manifested by the fact that both the Mutual and Uni¬
versal Companies have for quite a considerable time, been
taking a good many of our best men away from us by of¬
fering them better inducements as to salary. And in all
respects, I think the competition has been as keen and as
active as could exist in any line of business. As a matter
of fact, there has been no co-operation between the three
divergent competitive interests, except possibly in one or
two cases where unjust censorship laws have been agitated,
where there has been co-operation to a certain extent, but
there hits not been the co-operation that I think exists and
should exist between competitive units in other lines of
business. In other words, it seems to me that in matters'
of common ' interest, competitors should unite, but that is
Bv Mr. Caldwell:

Frank L. Dver, Direct Examination. 10(11

not the case with the three moving picture units referred
to.

Q. Suppose the General Film Company undertook to
increase the price of service to a given theatre, what would
happen? A. Well, if it did that, as sometimes does hap¬
pen, we find that a theatre is paying less than he ought
to pay, paying less than the service is worth — if the theatre
is convinced that the service is worth the additional price,
he will pay it, the same as in any other line of business,
but if the price is not satisfactory, the theatre will get
service from one of our competitors. That is happening all
the time. We are losing customers to them and they are
losing customers to us. There is a constant shifting back
and forth all the time.

Q. Would it be possible for the General Film Company
to unduly raise the price of service to customers? A. No,
sir, it would not. As I stated yesterday, the average profit
of the General Film Company is only ten per cent.

Q. Can you state how many pictures are being released at
the present time by the licensed producers and importers?
A. In the regular service, about thirty-two single reels, and
sixteen multiple reels, making a total of forty-eight, and
twelve or thirteen reels in exclusive service, making a total
of sixty or sixty-one per week.

Q. Can you state how many pictures are being released
weekly by the Mutual group of producers and importers? A.
About twenty-six. I think they are working to a production
of twenty-eight per week, which would be the equivalent of
four per day.

Mr. Guosvenoii: What do you mean by “they are
working?" I object to that, on the ground that it is
not the proper answer to the question, which was
“What is the output of those companies?"

By Mr. Caldwell :

Q. Can you confine your answer to a statement of the
actual conditions? A. About twenty-six to twenty-eight per
week.

Mr. Grosvenor : What does it show on that book
that you are referring to as a memorandum?

1G02 Frank Ii. Dybu, Direct Examination.

The Witness : It shows that for the week o£ October 20th,
there were twenty-six.

By Mr. Caldwell :

Q. Does that include the special releases? A. Yes, sir, it
includes their entire output. .

Q. How many pictures are being released weeklyby
, Universal group of producers and importers. A. Twenty-
eight, or four per day. That is the logical number of releases.

Mr. Grosvbnor: I object to this added answer
about the logical number. It is not responsive to the
question.

. The Witness: By “logical number” I meant it provided
a program of four reels per day with a daily change.

By Mr. Caldwell:

Q. The figure that you gave of twenty-eight, represents

the actual number of weekly releases, does it not? A. It does.

Mr. Grosvbnor: How did you make up the twenty-
eight on this? Did you consider, wherever the title
i(Tn Hiree warts” you considered it as three

'q. You counted your own releases the same way. A. In

t1,eQ DeoWyou know how the prices to the exhibitor, charged
by the General Film Company, compare with the prices
charged by the exchanges handling the output of those tw^
groups, based upon the same run films?. A. On an averubc,
our prices are somewhat higher. The films are consideied
better and are worth more, but I know of isolated cases where
the prices obtained by the other exchanges are higher, be¬
cause they give exclusive territory in some cases. Tor 1

Frank D. Dyer, Direct Examination. lhbJ

stance, I know of a theatre in Atlanta that pays ?180 a week
for Mutual service, because that theatre has quite an exten¬
sive territory in which the Mutual program is not shown.
The price is based upon competitive conditions, and on an
average we are able to get better prices than they are
Q Has the General Film Company a customer m the
City of Atlanta from which it is receiving as high as ?180 a
week? A. I don’t recall uny.

Mr. Grosvbnor: May I interrupt? When you say
you are able to get better prices, you mean you are
able to get more from the exhibitor?

The Witness : They are willing to pay us more for our
films than they are for their films.

Mr. Grosvbnor: That is because you have the
larger theatres, isn’t it? .

Mr. Caldwell: I object to the witness being cross

examined at this particular time.

Mr. Grosvbnor: All right, I will withdraw the
question. I mean, I won’t insist on an answer. I
asked you if I could ask a question.

Mr. Caldwell: Any question that you want to
ask for the purpose of explaining what the witness lias
said or to correct any misapprehension, is perfectly
proper at the present time, but I do not think that you
ought to enter into a cross examination of the witness
until the direct examination has been concluded.

By Mr. Caldwell:

Q. Have you seen many of the pictures released by the
Mutual group and the Universal group?

A Wliy yes, I run across these pictures every once in a
while. I don’t see all. of them by any means. „

O Thev turn out good, meritorious pictures, do' they notr
A Yes sir, they are improving. They are mailing very
great strides. The pictures are not as good, I don’t think,

IGG-i Frank L. Dyer, Direct Examination.

1 as licensed pictures, but they arc very much better than they

Q. Can you state in what localities the General Film Com¬
pany is maintaining branches today? A. Yes, sir.

Q. Will you state them? A. Bangor, Maine; Boston,
Massachusetts;. Buffalo, Albany and Syracuse, New York;—

Mr. Grosvenor: (interrupting): That is already
in evidence.

Mr. Caldwell: You have a statement of the
branches of the General Film Company which was

2 prepared some time early in 1912, and which you in¬
troduced in evidence, which probably gave n correct
list of the branch exchanges of the General Film Com¬
pany as they existed at that time. This, however, has
undergone considerable change since that time.

Mr. Grosvenor : I would like to. check that off with
my list. Where is the Boston office?

The Witness : The two offices have been combined, and

® -we had to move to another location because of the

very harsh and oppressive Are laws.

Mr. GnosvENoa: Go ahead. 1 did not want to in¬
terrupt. I was just trying to get my own list ac¬
curate.

The Witness : Three offices in New York City. Rochester,
and Syracuse.

Mr. Grosvenor: Syracuse is a new one?

* The Witness: Three offices in New York City, ’Phila¬
delphia, Wilkesburre and Pittsburgh, Pennsylvania— two
offices in Pittsburgh; Baltimore, Maryland; Washington,
D. C.; Wheeling, West Virginia.

Mr. Grosvenor: Baltimore is a new office?

The Witness: Yes, sir. , ’ ' 1

Mr. Grosvenor : Wheeling is a new one?

Frank L. Dyer, Direct Examination. 1005

The Witness: Yes, sir. Atlanta, Georgia; Jacksonville,’ 1
Florida.

Mr. Grosvenor: Jacksonville is a new one?

The Witness: Yes, sir. Memphis, Tennessee; New Or¬
leans; Houston— that is a new office; Dallas, Texas; Okla¬
homa City, St. Louis, Cincinnati, Columbus, Cleveland,
Detroit, Indianapolis, Chicago, three offices instead of four.
Milwaukee.

Mr. Grosvenor : Milwaukee is a new office? 2

The Witness : Milwaukee is now. Minneapolis, Butte.

Mr. Grosvenor: Butte is new?

The Witness: No, Butte is old.

Mr. Grosvenor: Oh, yes.

The Witness: Omnlm, Kansas City, Salt Lake City,
Denver, Phoenix. That is a new office. g

Mr. Grosvenor: Phoenix is new?

The Witness: Yes. Los Angeles, San Francisco, Port¬
land, Oregon; Seattle, Spokane. St. Johns, New Bruns¬
wick, Montreal, Toronto, Winnipeg, Regina— that is a new
office; Calgary, a new office, nnd Vancouver.

By Mr. Caldwell:

Q. Were any of these new branch offices established,

Mr. Dyer, as a result of the competition which you had ' 4
with tbe Mutual and Universal exchanges? A. Yes, sir.
Established to get into territory tlmt they -were working in,
and we felt it important that we should get there our¬
selves. :

Q. Which you were .also serving, however, from some
other branch? A. From a remote branch, yes, sir.

Q. Could you stnte offlinhd, some of those offices that
were established for that purpose?. A. Bangor, Maine;
Syracuse, New York; Baltimore, Maryland; Wheeling, West-;

1000 Frank L. Dyer, Direct Examination.

Virginia: Jacksonville, Florida; Milwaukee and Phoenix
and Calgary. The office at Regina was established simply foi
the purpose of providing a place where films ®*Bht J*
censored in the Province of Saskatoon, in Canada. Tin.
Canadian provinces are very keen about tl.eir censorship.
They look upon it apparently ns a source of revenue.

Mr. GitosvENon: I do not understand that last
sentence. Look upon what?

The Witness : Upon the possibilities of censoring films.
By Mr. Caldwell:

Q What territory is being served by the Albany office
of the General Film Company? A. The Albany office serves
customers in the City of Albany and neighboring towns,
wo" in the northern part of Hew York State, sends
films over into Vermont, the western part, of Massachu¬
setts, and works down the Hudson River, about ns far

Q Now, what, competition have you in that territory.'
A Have vou the list of competing exchanges?

Q. I think you have the list. A. (referring to > list) I .
The Universal Company maintains an exchange m Albany
which directly competes with us or directly competes with
the Albany office; the Mutual Company m«i"t»ins a branch
in Springfield, Massachusetts, covering part of the Albany
territory. Both Mutual and Universal companies main¬
tain branches at Buffalo, which compete with the Albany
territory, and both the Universal and Mutual companies
maintain offices; in New York City, which also compete
with the Albany territory. A competing exchange, pi
rather, an exchange, can effectually serve customers with-
in reasonable express distance.

Mr. Caldwell: It is now our usual time of ad-

wiiereupuii, as

until 2:30 P. M.,

0 P. M., the hearing is adjourned

Frank L. Dyer, Direct Examination. 1007
New York City, November 12, 1913.

The hearings were resumed pursuant to adjournment at
2:30 o’clock P. M., November 12, 1913, at Room lo9, Man*
battau Hotel, New York City. .

The appearances were the same ns at the morning se

Sl° Thereupon FRANK L. DYER resumed the stand.

Direct examination continued by Mr. Caldwell:

G. What territory is served by the Atlanta branch of
tiie General Film Company? A. The Atlanta brunch
handles the territory in Georgia, and to a little extent it
works down into Florida, also works over into Alabama,
and handles some customers in Eastern Tennessee, and
works up into South and North Carolina.

Q Who are vour competitors in that territory? A. The
Mutual Company maintains an exchange on Walton. Street,
near our office, and the Universal Company maintains an ex¬
change in the same building that we are in. In addition,
the Mutual Company maintains an exchange in Charlotte
N.'C., which competes with our Atlanta branch in North
and South Carolina.

Q. Do you know the name pf the Universal exchange

the Universal? A. Ob, tbe Universal?

.. Consolidated Film & Supply Company.

Q. And limits itself to that program.' A. Yes, sir. ■
Q. And does not handle any of the pictures produced
bv the Mutual group? A. No. , , ,

Q. What territory is served by the Baltimore branch of
the' General Film Company? A. Practically the City of
Baltimore alone. There are some exhibitors in Baltimore
served from Washington, and, I think, also some exlnbitois
in Baltimore who are served- from Philadelphia.

Q What competitors have you in Baltimore, or m the
territory served from your Baltimore branch? A. The
Mutual program is handled in Baltimore by the Conti-

1G0S

Frank L. Dyer, Direct Examination.

nental Filin Exchange, and the Universal is handled in
Baltimore by the Baltimore Film Exchange. Both o£ these Q

exchanges directly compete with us in Baltimore. In addi¬
tion, the Universid program is handled in Washington by
the Washington Film Exchange, and the Mutual Company
has a branch in Washington, which handies their program.

The competition with us is direct.

Q. The Continental Film Exchange is one of the several
exchanges allied with the Mutual group, and the Balti¬
more Film Exchange is the name of another exchange al¬
lied with the Universal group, each devoting itself ex¬
clusively to the handling of films of their respective groups
of producers, is that correct? A. Yes.

Q. What territory is served by the Bangor, Maine,
branch of the General Film Company? A. That office serves
customers in the central part of Maine, down as far sonth
as Portland, but several customers in Portlnnd are served
from the Boston office.

Q. And what competitors has the General Film Com¬
pany in that territory? A. The Universal Company main¬
tains, or rather the Universal program is handled in Boston
by the New England Universal Film Exchange, and the
Mutual Company maintains a branch in Boston. In addi¬
tion, the New England Company maintains a branch at
Watcrville, Me., a short distance southwest of Bangor,
and the Waterville office competes direct with our Bangor
office. Before putting in the Bangor office, I might say that
we debated whether to locate it at Waterville, or Bangor, but
we thought that Bangor would be the better place. I do
not recall whether the Mutual at that time was in Water¬
ville or not. My impression is that they went to Water¬
ville after we went to Bangor.

Q. What territory is served from the Boston branch of
the General Film Company? A. The Boston branch, owing
to the proximity of the Charleston Navy Yards, serves quite
a number of battleships, which is true of our two com¬
petitors. The territory served by the Boston office is Massa¬
chusetts, westerly until it overlaps the Albany territory, Q

the southern part of Maine, New Hampshire, Rhode Island,
and the eastern part of Connecticut, to where it overlaps
the New York territory. ■> --

Q. What competition have you in that territory? A.

We have a great deal of competition in that territory. The

Frank L. Dyer, Direct Examination. 1609

Mutual Company maintains a branch at Boston, and the
Universal films are handled by the New England Universal
Film Exchange. In addition, the Universal maintains at
Springfield, Mass., a branch of the Universal Film Ex¬
change, of New York. The Mutual Company likewise main¬
tains a branch in Springfield, Mass.

Q. What territory is served from the Buffalo branch
of the General Film Company? A. The territory around
Buffalo, ns far east as Rochester, running sonth to Bing¬
hamton, the northern part of Pennsylvania, and the eastern
part of Ohio, and Erie, Pa.

Q. What competition have you in that territory? A.
The Mutual Company maintains n branch in Buffalo. In
fact, as I recall, the Mutual Company has moved into
quarters we formerly occupied before we moved out.

Mr. GnosvENon: Please mark, Mr. Examiner, for
identification, the memorandum which the witness is
using.

Mr. Caldwell : I will offer it in evidence.

Mr. Ghosvbnor: I simply wanted it to help me in
my cross examination, but if yon are going to offer
it in evidence, it need not be marked now.

Mr. Caldwell: Go ahead, Mr. Dyer.

The Witness: The Universal program is distributed in
Buffalo from the Victor Film Service. These exchanges
cover the same territory as our Buffalo office.

By Mr. Caldwell:

Q. What territory is served by the Butte, Montana,
branch of the General Film Company? A. Principally Mon-
, tana, Eastern Idaho, and Northern Utah. The territory
served by the Butte and Salt Lake City branches is more or
less overlapping.

Q. What competition have you in that territory? A. The
Mutual Company maintains an office in Butte, Montana,
under the name of Pacific Mutual Film Corporation. It
also maintains an office at Salt Lake City, both of which
compete with our Butte office. The Universal program is
distributed from the office in Butte of the William H. Swan¬
son Film Company, and the same concern, under the same

1C70

Frank L. Dyer, Direct Examination.

name, operates an office in Salt Lake City. So that these
two competitors are located at the same points that we are,
and have the same competitive advantages.

Q. What territory is served by the branch of the General
Film Company maintained at Calgary, in the Province of
Alberta, Canada? A. The Calgary office serves the rapidly-
developing Canadian territory located between Winnipeg
and Vancouver, including the important cities of Calgary
and Edmonton. That territory extends practically along
the line of the Canadian Pacific Railroad.

Q. And what competition have you in that territory? A.

I might say we opened the office at Calgary to take care .of
that territory because the jump between Winnipeg, or Van¬
couver, was too big to give effective service. We have compe¬
tition from the Universal in Calgary, their exchange being
called the Canadian Film Exchange ; and they also maintain
an office under the same name at Edmonton, Alberta. The
Mutual Company maintains an office at Calgary, called the
Mutual Film Corporation of Canada, and these offices com¬
pete directly with us and cover the same territory.

Q. You have stated that the General Film Company main¬
tains three branch offices in the City of Chicago. What ter¬
ritory is served by these three branches? A. Principally the
City of Chicago. These branches also serve customers in the
southern part of Wisconsin, in the State of Illinois, and
some customers in Iowa. . «

Q. What competition do you meet with in that territory?
A. The Universal program is handled in Chicago by the Anti-
Trust Film Company, the Laemmle Film Service Company,
and the Standard Film Exchange; and the Mutunl Compnny
maintains an office in Chicago under its own name, and its
program is. also handled by the H. & H. Film Service Com¬
pany. The Mutual Compnny also maintains a branch at .
Des Moines, Iowa, which competes for the Iowa business of
the General Film Company. Universal films are also distrib¬
uted from Des Moines, Iowa, and from the Laemmle Film
Service, which likewise competes for the Iowa business with
the Chicago branches of the General Film Company.

Q. What territory is served from the Cleveland, Ohio,
branch of the General Film Company? A. The 'territory, in"
and around Cleveland, as far east as Erie, including cus¬
tomers at Toledo, and the northern part of Ohio, not served
from Columbus.

1071

Frank L. Dyer, Direct Examination.

Q. And what competition have you in that territory? A.

|) The Mutual Film Company maintains a branch at Cleveland,

Ohio, and the Universal program is distributed by the Victor
. Film Service, of : Cleveland, Ohio. The Mutual Company
maintains an office at Columbus, Ohio, and the Universal
films are distributed from Toledo, Ohio, by a concern called
the Toledo Film Exchange Compnny, and both of these ex¬
changes also compete with the Cleveland branch.

Q. What territory is served from the branch office of the
General Film Company, maintained at Columbus, Ohio? A.
Practically the City of Columbus, and the territory immedi¬
ately surrounding it.

Q. What competition have you in that territory? A. The
Mutunl Company maintains a branch at ColuinbuB, so as to
directly compete with ns, and also maintains branches at
Cincinnati and Cleveland, which can also and do reach the
Columbus territory. The Universal film is handled from
Cleveland, Toledo, and Cincinnati, which points also include
the Columbus territory.

Q. What exchanges handle Universal programs at Cin¬
cinnati, Cleveland, and Toledo? A. The Universal?

Q. Of the Universal— yes? A. The Cincinnati Buckeye
Film Exchange handles the Universal program at Cincin¬
nati; the Victor Film Service handles the Universal program
in Cleveland, and the Toledo Film Exchange Company han¬
dles the Universal program in Toledo.

Q. What territory is served from the branch of the Gen¬
eral Film Company, maintained at Dallas, Texas? A. The
Dallas branch until the formation of the branch at Houston,
served the entire State of Texas, and' also some towns in Ar¬
kansas, and Oklahoma, on the Texas border. Since the for¬
mation of the branch at Houston the territory of the Dallas
branch is confined to towns in the neighborhood of Dallas,
’ ; including Fort Worth; and territory south and north of Dal¬
las.

\ Q. What competition have you in that territory? A. The
0. Mutual Compnny maintains n branch in Dallas, a block nway

V from our branch, and the Universal film is distributed in

Dallas by the Consolidated Film Supply Co. Both the Uni¬
versal and the Mutual companies maintain branches in Ama¬
rillo, Texas, which point I am not familiar with, but it is
evidently a railroad center, and probably competes with the
Dallas branch. The Mutual Compnny also maintains a

1G72 Frank L. Dyer, Direct Examination.

branch at Oklahoma City, which competes with the Dnllas
branch for business in the border cities between Oklahoma 0
and Texas; and the Universal program is handled also from
Oklahoma City, by the United Motion Picture Company,
which likewise competes in that territory.

Q. What territory is served by the Denver, Colorado,
branch of the General Film Company? A. The Denver, Col¬
orado, branch serves customers in Colorado, some, I think, in
eastern Utah, and as far north as Cheyenne, Wyoming. ' It
overlaps the territory of the Omaha and Kansas City
branches of the east.

Q. What competition have you in that territory? A. The
Mutual Company maintains a branch in Denver, and the
Universal films are distributed in Denver by the Wm.. H.

Swanson Film Company. The Universal Film Company also
maintains a branch for the Universal Film & Snpply Com¬
pany at Wichita, Kansas, which covers part of the territory
supplied by the Deliver office. Both the Universal and Mu¬
tual companies maintain branches in El Paso, Texas, which
would compete with part of the territory supplied from Den-

Q. Do you happen to know whether the Wm. H. Swanson
Film Company, which maintains a branch at Denver, Colo¬
rado, is conducted by the same William H. Swanson who
appeared here as a witness on behalf of the petitioner? A.

I don’t know whether Mr. Swanson conducts this exchange
or not; I don’t know the relations between these exchanges
and the Universal Company, except that they handle the
Universal program on some basis that prevents conflicts.

Whether they are owned at all by that company, or operated
under i some agreement with it, I am not able to state. The
same William H. Swanson whom you refer to is the same
man who started these exchanges. I know him very well. I
know him. I know him. I have met him. Well, I know •
him very well.

Q. What territory is served from the Detroit, Michigan,
branch of the General Film Company? A. The territory of ^

Michigan, Grand Kapids, down into. Ohio, including some O
customers, I think, in Toledo.

Q. What competition have you in . that territory? A. ., ,

Very active competition. Tlie Mutunl Company main¬
tains a branch in Detroit, and the Universal program is
distributed by the Detroit Universal Film Company, in

Frank L. Dyer, Direct Examination. 1073

Detroit. The Universal Company also maintains a branch
% at Grand Bapids, and, as I have stated, a branch, or rather

its film is distributed from Toledo, by the Toledo Film
Company. The Mutual Company also maintains a branch
at Grand Bapids, so that in this particular territory each
of our competitors lias two branches to our one.

Q. What territory is served from the branch of the
General Film Company maintained at Houston, Texas?
A. The Houston branch serves territory on the M. K. S T.
Railroad, as far north as Waco, also Galveston, and towns
on the Southern Pacific Railroad to the Louisiana line
on the northeast, including Beaumont, and El Faso.

Q. What competition have you in that territory? A.
The Denver branch of the General Film Company, I
might state, was started by the receiver, and not by the
company. The Mutual Company maintains a branch at
El Paso, Texas. It also maintains a branch at New
Orleans, La., and at Amarillo, Texas. I don’t know where
Amarillo is, so that I am not able to Btnte of my own
knowledge what the territory is that it serves. The Uni¬
versal Company also maintains an office at Amarillo,
which apparently is a good distributing point; and there
are two offices in El Paso handling the Universal program,
namely, the Consolidated Film Supply Co., and the William
H. SwauBon Film Company. The Universal Company
also maintains an office, or its films are distributed from
New Orleans, by the Consolidated Film Supply Company.
Neither of our competitors appears to have an office at
the present time in the City of Houston.

Q. But the territory which is served from your Houston
branch is served by your competitors? A. Oh, yes; they
have customers there, and it was only recently that wo
opened it, or the receiver opened up the Houston office.

. Q. What territory is served from the Indianapolis
branch of the General Film Company?. A. The State of
'Indiana, northern Kentucky, western Ohio,- and eastern
Illinois.

'& Q. What competition have you in that territory? A.

The Mutual Company maintains offices in Cincinnati,
Columbus, Evansville, and the Chicago offices would
also cover the upper part of Indiana, on the Pennsylvania
.and Lnke Shore Roads. The Universal program is distrib-.
uted from Indianapolis by the Central Film Service Com-

1074 Frank L. Dyer, Direct Examination.

pany. They also have distributing offices for their films
in Chicago and Louisville, to cover the Indiana territory.

Q. What territory is served from the Jacksonville,
Florida, branch of the General Film Company? A. The
Jacksonville branch is a new office that has been started,
covering the State of Florida, including the towns around
Tampa, on the western coast, and the numerous Winter
resorts on the eastern coast. It was started because much
of the business in Florida is circuited, that is to say,
films started out on a circuit to several theatres before
coming back to the branch, and when the business was
handled from Atlanta it was very difficult to get these •
films back, and they were kept out anywhere from four
to six weeks after they were due to be returned. The
Jacksonville office was started to facilitate this business.
Some of the important exhibitors of Jacksonville are
served from Atlanta.

Q. Wlmt competition have you in that territory? A.
The Atlanta office of the Mutual Film Corporation com¬
petes in Florida, and the Mutual Film Corporation also
maintains a branch at Tampa, which covers the Florida
territory very well. The Universal program is also handled
from Atlanta, and there is a branch or a distributing ex¬
change for their films at Tampa, so that both of our
competitors are directly in this territory, although neither
has a branch at Jacksonville. The situation in Florida
is very similar to the situation in Maine, the same terri¬
tory being covered, although the exchanges are not located
in exactly the same cities.

Q. What territory is served from the Kansas City,
Missouri, branch of the General Film Company? A. The
territory around Kansas City, up towards Omaha, where
it conflicts with the Omaha territory, into Eastern Kansas,
the western part of the State of Missouri, and south¬
westerly into the territory covered by the Oklahoma branch.

Q. And what competition have you in that territory?
A. The Mutual Film Compnny maintains a branch at
Kansas City, and the Universal films are hnndled by the
Universal Film Company, of Kansas City. The Mutual
Company also maintains branches in Omaha, St Louis, and.
Oklahoma City, competing with our Kansas City branch.
The Universal program is also handled from Wichita, St.

Frank L. Dyer, Direct Examination. 1075

Louis, and Omaha, so as to also compete directly with
D the Kansas City branch, and covers the same territory as

that branch.

Q. Wlmt territory is served from the Los Angeles,
California, branch of the General Film Company? A.
The southern part of California, up towards the territory
covered by the San Francisco office, westwnrdly into
Arizona, towards the territory covered by the Phoenix
office, and as far south us San Diego.

Q. And what competition have you in that territory?
A. Tlie Mutual Company maintains a branch at Los Angeles,
called the Pacific Mutual Film Corporation, which com¬
petes directly with our Los Angeles branch; it also main¬
tains an office in San Francisco, which works down into
the territory covered by the Los Angeles branch. The
Universal program is distributed from Los Angeles by
the California Film Exchange, which competes directly with
our Los Angeles branch, and from San Francisco by the
California Film Company, which works into the territory
covered by the Los Angeles branch. The California Filin
Exchange also handles the Universal program at Phoenix,
which works westwardly through the territory covered by
the Los Angeles branch.

Q. What territory is served from the branch of the
General Film Company maintained at Memphis, Tennessee?
A. The western part of Tennessee, including Nashville, up
into Kentucky, where it begins to overlap the territory
of the Cincinnati office, Western Arkansas, and the north¬
ern part of Louisiana, down into Shreveport. It also
covers some of the business in Northern Mississippi, and
Northern Alabama.

Q. What competition have you in that territory? A. The

Mutual Company maintains a branch in Memphis, so as to
directly compete with us, and the Universal film is handled
\ by the Consolidated Film Supply Company, of Memphis, so
as to directly compete with us. The Universal program is
also handled by the Standard Film Exchange, of Louisville,
so as to cover the northern , part of the territory covered by
the Memphis office of the General Film Company, and the
Evansville office of the Mutual Company would work down
■into the northern territory covered by the Memphis office of
the General Film Company. Both of the distributing offices
of the Mutual and Universal programs in. New Orleans,

1G7G Frank L. Dyer, Direct Examination.

Frank L. Dyer, Direct Examination.

1677

working north, would also cover the territory handled by

the Memphis branch. O

Q. What territory is served from the branch of the Gen¬
eral Film Company maintained at Milwaukee, Wisconsin?

A. Principally the City of Milwaukee, and northern Wis¬
consin, extending as far west as the territory included in the
Indianapolis office, and keeping north of the territory cov¬
ered by the three Chicago offices.

Q. What competition have you in that territory? A. The
Mutual program in Milwaukee is distributed by the Western
Film Exchange, and the Universal program is distributed
into this territory from its Chicago offices. The Milwaukee
office of the General Film Company is quite close to the Chi¬
cago office, and while not considered strictly necessary, it
was desirable to cover customers in the northern part of
Wisconsin. The same territory would be covered by the Uni¬
versal program by their Chicago offices, working northward¬
ly, and their Minneapolis office working east

Q. What territory is served from the Minneapolis, Min¬
nesota, branch of the General Film Company? A. The State
of Minnesota, the eastern part of the Dakotas, and the north¬
ern part of Iowa, and some customers in the eastern part of
Wisconsin.

Q. What competition have you in that territory? A. The
Mutual Company maintains a branch at Minneapolis, and
the Universal program is distributed from Minneapolis by
the Laeminle Film Service. In addition, the Universal pro¬
gram is distributed from Des Moines, so as to cover the State
of Ohio, which we have to cover from Minneapolis and Chi¬
cago, and the Mutual Company maintains a branch at Des
Moines which serves the same function for their program.

In other words, both the Mutual and Universal companies
cover the State of Iowa more effectively than we do.

Q. What territory is served from the Montreal, Canada, ,
branch of the General Film Company? A. The Province of
Ontario, including Ottawa, and working down the St. Law¬
rence River to include Quebec, but not including New Bruns- _

wick or Nova Scotia.

Q. What competition have you in that territory? A. The
Mutual Company maintains a branch in Montreal, the Mu¬
tual Film Corporation of Canada, and the Universal program
is distributed by the Canadian Film Exchange from Montreal.

These offices cover the same territory as onr branch. The

territory covered by the Montreal office practically extends

# parallel to the St. Lawrence River and south of the St. Law¬
rence.

Q. What territory is served from the New Orleans, Louis¬
iana, branch of the General Film Company? A. The terri¬
tory of Louisiana, working northwardly into Shreveport,
running west into Oklahoma, and with the approval of the
receiver in Texas, including some cities in the northeastern
part of Texas. This office also serves Mobile and other towns
in Alabama and Mississippi. Perhaps I should explain that
the territories covered by these branches in almost every case
follow the lines of the railroads and rivers; lines of travel.

Q. What competition have you in the Louisiana territory
or in the territory served from the New Orleans branch? A.
The Mutual Company maintains an office in New Orleans,
so as to directly compete with us, and the Universal program
is distributed by the Consolidated Film & Supply Company
at New Orleans, which also competes directly with us. The
Dallas and Oklahoma City offices of our competitors cover
a portion of the territory also of the New Orleans branch.
This territory, for the most part, contains very small thea¬
tres, although there are some large theatres in New Orleans.

Q. I think you have testified that the General Film Com¬
pany maintains at the present time three branches in the
City of New York, is that correct? A. Yes, sir.

Q. At one time a greater number of branches were main¬
tained in New York City? At one time you had five
branches in the City of New York? A. Yes, sir.

Q. What became of the branches of the General Film Com¬
pany at one time maintained in New York City that are not
now maintained? A. Early in the present year, we consoli¬
dated four of these branches, and located them in two new
offices, one office at the corner of 23rd Street and Sixth
Avenue, and the other office at the corner of Fourth Avenue
• and 34tli Street, so that we are at the present time maintain¬
ing these two large exchanges, and also the Peoples Exchange
or Peoples Branch, on 42nd Street.

♦ , Q. Why did you consolidate those branches?

Mir. Giiosvenoii : Objected to as immaterial.

The Witness : Well, that was done before I became Pres-

T? n ANT,- T, T»vmn. DIRECT EXAMINA

Praxis L. Dyer, Direct Examina

1679

ident of tlie General Film Company, and I do
actly why it was.

recall ex-

By Mr. Caldweli. •

Q. Were the questions of economy and greater efficiency
in distribution— were they factors, or of convenience?

Mr. Grosvenor: I object to that on the ground that
the witness has stated he does not know, and the ques¬
tion is leading.

A. I think the principal reason was that the quarters
where these former branches were located were cramped and
small, and dangerous in case of fire. Of course, the consoli¬
dation of the branches would result in economy of the

service.

Q. Without impairing the efficiency of the service to the
exhibitor? A. Why, it actually would improve the efficiency
of the service,

Q. Will you state what territory is served from the three
brandies of the General Film Company maintained in the
City of New York? A. Greater New York, Long Island,
Westerly, Connecticut, (including Bridgeport and Water-
hury, up the Hudson River as far us Poughkeepsie; Newark,
New Jersey, and tlie northern towns in New Jersey.

Q. Including Jersey City and Hoboken? A. Yes, sir.

Q. What competition are you met with in that territory? •
A. The main office of the Mutual Company in New York City
is located in the same building that our 23rd Street branch is
located in, although below us.

Q. That is 71 West 23rd Street? A. Yes, sir. They also
maintain a branch at 145 West 45th Street. The Universal
program is handled by two branches of the Universal Film
Exchange on East 14tli Street, and 1600 Broadway. Tlielse
branches compete directly with us in this territory. The
Universal program is also distributed by the Royal Film Ex¬
change of Newark, so that there is n better distribution of
tlie Universal program in this respect. The Springfield
branch of tlie Mutual Company and of the Universal Com¬
pany also compete' in the territory in 'Connecticut, which we

Oklahoma, branch of the General Film Company? A. That is
a small branch, covering the territory of Oklahoma, which is
at present going through a period of hard times through
over-development. It inelndcs also some towns in the north¬
ern part of Texas, and some customers, ns I recall, in Ar¬
kansas and Indian Territory.

Q. And wliat competition have you in that territory?
A. The Universal program is distributed by the United Mo¬
tion Ticture Company of Oklahoma City, which competes
directly with us in that territory, and the Mutual Company
maintains a branch at Oklahoma City. The two competitors
in respect to this office, have an advantage over us because
our Oklahoma office is not allowed to work down into
Texas, and our Dallas office does not work up to Oklahoma
City, but they have no restrictions of their field of operation.

Q. Wlmt territory is served from the Omaha, Nebraska,
branch of the General Film Company? A. The State of Ne¬
braska, running westwardly of the territory covered by the
Denver office, and customers in Iowa up to the territory
covered by the Minneapolis office and working downwards.
Also customers to tlie south where the territory of the Kan¬
sas City office is encountered.

Q. And wliat competition have you in the territory served
from the Omaha branch? A. The Mutual Company main¬
tains a branch at Omaha, and the Universal program is
handled by the Lnenunle Film Service of Omaha., These two
concerns, as I have before stated, maintain offices in Iowa, or
have exchanges for the distribution of their programs in
.Iowa, and therefore cover the Iowa territory direct, whereas
we have to cover it from the Omaha office.

Q. Wliat territory is served from the Phoenix, Arizona,
branch of the General Film Company? A. That is a very
small, unimportant office, and I do not know very much
about it, except that it covers a limited territory in Arizona,
principally on the railroad lines from El Paso to Los An¬
geles.

Q. And what competition have you in that territory?
A. The Universal program is handled by the California Film
Exchange, which is located directly in Phoenix, and also
from Los Angeles and El Paso, as I have before explained.
The Mutual Company maintains a branch in El Paso, Texas,
and also a branch in Los Angeles, so that these two offices
between them’ cover the same territory.

lerved from the Oklahoma City,

1G80 Prank L. Dyer, Direct Examination.

1 Q. Wlmt territory is served from the Philadelphia branch

of the General Film Company? A. The Philadelphia branch Q

is a large and active branch, serving customers in Philadel¬
phia, in southern New Jersey, including Trenton and Atlan¬
tic City and the summer resorts on the Jersey coast. It also
serves customers in Delaware, down the eastern shore of
Maryland. It works westerly towards Harrisburg, and
northerly towards the Wilkcsbarre office. The Philadelphia
office also has some customers that ore served by it as far
south ns Richmond, Virginia.

Q. Wlmt competition have you in the territory served
from the Philadelphia branch? A. The Mutual maintains a
branch in Philadelphia, and the program is also handled by
the Continental Film Exchange of Philadelphia, and it also
maintains a branch at Harrisburg, Pennsylvania.

Q. Doesn’t the Mutual maintain two branches in Phila¬
delphia? A. I said that. One is the Mutual Film Company
and the other is the Continental Filin' Exchange. The Mutual
program is also distributed from Wilkcsbarre, Pennsylvania,
and the Western Film Exchange. Also, in Baltimore, Mary¬
land, as I have before stated. The Universal maintains three
g offices, or rather its films arc distributed from three offices
in Pennsylvania, the Eagle Projection Company, Interstate
Film Company, and the Philadelphia Film Exchange. The
Universal program is also distributed from Harrisburg, from
Wilkcsbarre, and from Baltimore, so that our competitors
are’directly in the same territory as ourselves.

Q. You have stated that the General Filin Company main¬
tains two branches in the City of Pittsburg, Pennsylvania,
have you not? A. Yes, sir.

Q. What territory is served from those two branches?

A. The western part of Pennsylvania up into New York
•4 State to the territory covered by the Buffalo office, westerly
into Ohio, including Youngstown. And down in West Vir- •’
ginia. I think the Pittsburg offices also serve some cus¬
tomers in western Maryland.

Q. And what competition have you in the territory served
from your two Pittsburg branches? A. The Universal pro- 0

gram is distributed in Pittsburg by the Pittsburg Photoplay
Company, and the Universal program is distributed in Pitts- ?
burg by the Independent Film Exchange, both of which con¬
cerns compete directly with our Pittsburg branches. In

Frank L. Dyer, Direct. Examination. 1081

addition, the Harrisburg, Buffalo* Cleveland, Columbus and 1
A Cincinnati offices of our competitors would work into the

territory covered by the Pittsburg offices of the General Film
Company.

Q. What territory is served by the Portland, Oregon,
branch of the General Film Company? A. Principally the
State of Oregon, the northern part of California out of the
reach of the Sail Francisco office, the southern part of the
State of Washington below the Seattle office.

Q. What competition has the General Film Company in
that territory? A. The Mutual Company maintains a branch
at Portland, Oregon, and the Universal program is distrib- 3
uted by the Film Supply Company, also located at Portland,
Oregon, so that these offices compete directly with us. Our
competitors also maintain brunches, as we do, in Seattle,
Spokane, and San Francisco, so as to cover this territory in
addition to the Portland offices.

Q. What territory is served from the Regina branch
of the General Film Company? That is in the Province of
Saskatchewan. A. The Regina office was largely formed for
the purpose of providing for the censorship of films in that
province. That is a very recent office, so that I am not
able to state of iny own knowledge, the territory which It 8
covers, except that, us we all know, it it located between
Winnipeg and Calgary and covers this intermediate terri¬
tory. Most of the information I have been giving regarding
our offices is based on my own personal observations, or
from the direct reports to me from the managers.

Q. Do you know wlmt competition you have in the ter¬
ritory in which Regina is located? A. The Cauadian Film
Exchange handles the Universal program in Regina, aud it
also maintains branches in Saskatoon and Calgary, so ns
to cover this western Canadian territory — and the Mutual 4
Company maintains a branch in Regina and also' one in
Calgary, to cover the same territory. This territory, as
I said, is practically limited to the great trans-continental
railroads running across Canada, and does not extend north
£ and sou tli, but almost always east and west.

. ■ Q. What, territory is served from the Rochester, New
. York, branch of the General. Film Company? A. Almost
exclusively the territory of Rochester. This is a small
branch. The territory could almost as well be handled from
Buffalo. _

■ei- ...... T Tliimw'.'r ExamixatiOX.

Frank L. Dyer, Direct Exaji

10S3

Q. What competition do you find there? A. Neither ot
ouv competitors is located at Bocliester, but the Mutual
Company maintains a branch in Buffalo, and the Universal
program is distributed by the Victor Film Service ot Buf¬
falo. The Universal office at Albany also occupies a com¬
petitive relation to our Bocliester office. This is not an
important point, and it is not unlikely that the office will
be closed. .

Q. What territory is served from the St. Louis, Mis¬
souri, branch of the General Film Company? A. The St.
Louis branch is an important, large branch, serving the
territory around St. Louis, Eastern Missouri, into the ter¬
ritory covered by Kansas City, southerly into Arkansas,
including also, Kentucky, and southwesterly Illinois, and
a part of Iowa. .

Q. And what competition have you in that territory.'.
A. The Mutual Company maintains a branch in St Louis,
and the Universal Company also maintains a branch in St.
Louis, so that these concerns compete directly with us.
Both of our competitors also maintain branches in
Kansas City, Dos Moines, and other places that compete
into the territory covered by our St. Louis office.

Q. What territory is served from the Salt Lake City,
Utah, branch of the General Film Company? A. This is
not a very important branch, because the territory in Utali
is very sparsely settled, and the principal business is at
Salt Lake City. The branch, however, serves customers as
far north as Montana and co-operates to a certain extent
with the Butte office, which serves customers also westerly
towards Portland, and southeasterly towards Denver.' The
Salt Lake City office is not very important, and the terri¬
tory is not particularly good.

Q. What competition have you in that territory? A.
The Mutual Company maintains a branch at Salt Lake City,
and the Universal program is distributed by the William
H.' Swanson Film Company of Salt Lake City, so that our
two competitors are competing directly with ns in that

territory.

Q. What territory is served from the San hrancisco,
California, branch of the General Film Company? A. This
is also a very important branch. It includes the city ami
adjacent country around San Francisco, working west in
the State to Stockton, and working southerly towards the

Los Angeles territory, and northerly towards the territory
covered by the Portland, Oregon, office.

Q. And what competition have you in that territory?
A. The Mutual Company maintains a branch in San Fran¬
cisco.

Q. Under what name? A. Under the name of the
Pacific Mutual Film Corporation. And the Universal pro¬
gram is distributed in San Francisco by the California
Film Exchange. Here, aguin, our competitors surround us,
on the north by offices in Portland, and on the south by of¬
fices in Los Angeles, on the east, by offices in Salt Lake
City, so as to cover the territory of the San Francisco office.

Q. What territory is served from the Seattle, Washing¬
ton, branch of the General Film Company? A. Practically
the State of Washington, as far north os the Canadian
border, working westerly towards the territory covered by
the Spokane office, and down into Wisconsin into the terri¬
tory covered by the Portland, Oregon, office. Seattle also
serves customers in Alaska.

Q. And what competition have you in the territory
served from your Seattle office? A. The Mutual Company
maintains a branch at' Seattle, and the Universal program
is distributed by the Film Supply Company of Seattle.
Both of our competitors are, therefore, located in the same
central city that we are, in this territory, and in addition,
have brandies or distributing points in Spokane and Port¬
land. I notice that the Mutual maintains a branch at
Sioux Falls, South Dakota, which gives them better dis¬
tribution in the territory between our Butte and Minne¬
apolis offices. We have no office at that point.

Q. Wlmt territory is served from the Spokane, Washing¬
ton, branch of the General Film Company? A. The Spo¬
kane, Washington, branch serves the territory in the west¬
erly part of Washington, not covered by Seattle, into Ida¬
ho, and the westerly part of Montana, also down into
northwesterly Wyoming, and northern Utah. This is a
territory of a few scattered towns and not very large the¬
atres.

Q. Did you mention botli the Mutual and the Universal
companies in connection with your Spokane branch? A.
The Mutual Company maintains a branch in Spokane, and
the Universal program is distributed by the Film Supply

108i Frank L. Dyer, Dinrccr Examination.

1 Company of Spokane, so that tliey ore located in the same

city that we are. Q

Q. What territory is served from the St. Johns, New
Brunswick, branch of the General Film Company? A. This
branch serves the territory of New Brunswick and Nova
Scotia, including the important towns of Halifax and
Prince Edward Island. 1

Q. And wlmt competition have you in that territory? A.

The Mutual Coinpanymaintuius a branch at St. Johns, the
Mutual Film ' Corporation of Canuda; and the Universal
. Company appeurs to have no distributing oilice at St. Johns,

3 its nearest distributing point being at Montreal. This ter¬
ritory is not very important, except for the two cities of St.

Johns and Halifax.

Q. What territory is served from the Syracuse, New York,
branch of the General Film Company? A. The Syracuse
branch is very similar to the Kocliestcr branch, and is quite
unimportant. It serves principally tile City of Syracuse, and
its immediate neighborhood, including, I think, TJtica. But
its territory could be handled about as effectively from Buf¬
falo and Albany, and it is not improbable that this oilice
s may also be closed.

Q. What competition have you in the territory served
from the Syracuse oilice? A. Principally from the Buffalo
and Albany offices of our competitors.

Q. Wlmt territory is served from the Toronto, Canada,
branch of the General Film Company? A. That branch
serves the territory principally of the City of Toronto, which
is a. very lurge, flourishing place, also in Ontario, easterly
towards Montreal and Ottawu, and westerly towards Winni¬
peg on the line of the Canadian Pacific and Grand Trunk
Bailroads. It serves the towns also on the Canadian shores

4 of the Great Lakes.

Q. And with what competition are you met in . that ter¬
ritory? A. The Mutual Company maintains a branch', in
Toronto, so as to compete directly with us, and the Universal
program is distributed by the Canadian Film Exchange,
which is also located in Toronto. Both the Mutual and Uni- O

versal programs are distributed also from Winnipeg, so us
to work easterly towards the territory covered by the
Toronto branch.

Q. What territory is served from the Washington, Dis-

Frank L. Dyer, Direct Examination. 1GS5

trict of Columbia, branch of the General Film Compnny? A. 1
v_) Principally Washington, D. C., and including also customers

in Baltimore, the westerly shore of Maryland, up into Mary¬
land towards the Pennsylvania line, westerly towards Hag¬
erstown, so as to meet the territory of the Pittsburg offices,
and southerly into Virginia nnd North Carolina. The Wash¬
ington office also serves some customers, I think, in West
Virginia towns. I recall Grafton, particularly, Grafton,

Wsct Virginia.

Q. And with what competition are you met in the terri¬
tory served from your Washington branch? A. The Mutual
Company maintains n branch in Washington, nnd the Uni- 2
versal program is distributed in Washington by the Wash¬
ington Film Exchange, so that, our competitors are located
directly at the same center of distribution ns ourselves. In
addition, the Mutual Film Corporation maintains a branch
at Charlotte, North Carolina, so as to cover the territory
midway between the Washington nnd Atlanta branch of the
General Film Compnny, and tire Universal program, is also
distributed in Charlotte by the Interstate Films Compnny,
so as to cover this intermediate territory.

Q. What territory is served by the Wheeling, West Vir- u
ginia, branch of the General Film Company? A. A very 3
limited territory, including the immediate neighborhood of
Wheeling, some towns in tiie eastern part of Ohio, like Bel-
laire and Martin’s Ferry, and some of the mining towns in
northwestern West Virginia.

Q. And wlmt competition do you have in tlmt territory?

A. The Mutual Company maintains a branch in Wheeling,
so as to compete directly with us, nnd the Universal Com¬
pany also maintains a branch in Wheeling, so as to likewise
compete directly with us in that rather limited territory.

Q. What territory is served from the Wilkcsbarre, Penn- -4
sylvanin, branch of the General Film Company? A. This
branch serves the territory principally in the immediate
neighborhood of Wilkesbarre, including Scranton, works
down towards the Philadelphia offices, and westwardly into
western New Jersey. It also serves some customers in
southern New York, such as Binghamton, and therefore ap¬
proaches the territory of the Buffalo and Rochester offices.

It works westerly on the northern part of Pennsylvania to¬
wards the Pittsburg, territory.

108G Frank L. Dyer, Direct Examination.

Q What competition do you find in tlie territory served
from your Wilkesbnrre branch? A. There is a Mutual ex-
change in Wilkesbnrre called the Western Film Exchange,
which appears to be located a few doors away from our
brnnch, and the Universal dims are distributed in i W ilkcs-
barre by the Exhibitors’ Film Exchange, which 1b locntcdm
the same building as the Mutual Exchange, so that these tuo
^changes therefore compete directly with our Wilkesbnrre

brnQCl What territory is served from the Winnipeg, Canada,
branch of the General Film Company? A. The important
territory around Winnipeg running westerly towards Cal¬
gary and Regina and easterly on the railroads towards To¬
ronto, a territory that is very large in area, but not very thick-
ly populated. Also, some of the growing cities on the north¬
ern shore of Lake Superior.

Q. And what competition are yon met with in that tern-
tory? A. The Mutual Company maintains a branch at Win¬
nipeg, the Mutual Film Corporation of Canada ; and the Uni¬
versal program, as is the case with all Canadian branches,
is distributed in Canada by the Canadian Film Exchange,
whose branch is located in Winnipeg, so that these two ex¬
changes therefore compete directly with ns on questions of

861 Q. Wlmt territory is served by the branch of the General
Film Company maintained in Vancouver, Canada? A. The
territory in aiul around Vancouver, working westerly to¬
wards Calgary and Edmonton. I am not sure, but I think
that part of the Alaska business is also handled from Y an¬
ti And what competition do you find in that territory?
I don’t mean Alaska, the last territory referred to but the
territory served from that branch. A. The Mutual Company
maintains a branch at Vancouver, and the Universal films
are distributed by the branch of the Canadian Film Exchange
at Vancouver. I might say that the Canadian Film Ex¬
change in Canada maintain offices at Edmonton and Saska¬
toon where the General Film Company is not located.

Q. Is there a point anywhere in the United States and
Canada where you are not met with, competition by one or
both of these exchanges, or exchanges allied with one or
the other, or both of these two groups of producers? A.
No there is not. As a matter of fact, with the exception

Frank L. Dyer, Direct Examination. ib»7

of Bangor, Jacksonville, Rochester and Syracuse, every
point where we have a distributing office, also contains an
office of one or the other or both of onr competitors, and
generally both of our competitors, and these few excep¬
tions are territories that are just ns effectively or almost
as effectively covered by our competitors from adjoining
towns. On the other hand, our competitors nre located at
a good many points where we have no branches, and where
it is not always easy to meet competitive conditions of serv¬
ice. For instance, their offices in Charlotte, North Carolina,
are important distributing points where we are not located.
Their offices in Tampa, Florida, are important points, al¬
though, for all practical purposes, we try to cover this ter¬
ritory from Jacksonville. Their offices in El Paso are
very important distributing points which we could not
reach from Houston probably inside of forty-eight hours,
and they have a very important advantage at this point.
The office of the Mutual at Sioux Falls is also an important
distributing point, which directly reaches territory that we
cannot effectively cover from Butte, Salt Lake, Omaha or
Minneapolis, and the offices of our competitors at Spring-
field, Massachusetts, nre important distributing points in
very thickly populated sections of the country. The towns
such as Springfield, Holyoke, Worcester, Greenfield and
Hartford being withiu very close striking distance.

The Witness : We furnish the theatres in those towns,
but I am trying to point out that by reason of the larger
number of offices that they have, our competitors can fur¬
nish them more easily than we can. lie offices iof the
Mutual in Evansville, Indiana, and of the Uimeisal in
Louisville, Kentucky, also cover territory that we cannot
reach so effectively from our Memphis, Cincinnati and
Indianapolis branches. On the whole, I should say that, so
far as competitive conditions are concerned, the Umveisal
and Mutual are more advantageously placed to give service
nuickly than we are, anil that the absence on our part of
enough distributing offices is something of a handicap.

1G88 Frank L. Dyer, Direct Examination.

By Mr. Caldwell:

Q. And liow do you And this competition, Mr. Dyer — *

is it active, keen, vigorous, and hostile? A. Yes, sir; it is
very active and very keen, and more or less bitter. The
business is a new business, and I might say that it lias not
become thoroughly civilized. There is not the feeling of
courtesy and good will that ought to exist between competi¬
tors. The feeling seems to be, on the part of exchauge
managers, one of personal hostility towards anyone who is
connected with a competing exchange. The effort in each
case is to try to get all the business that can lie gotten.

Our competitors make frantic efforts to take our customers
away from us by offering them more reels, or reels of newer
age, or better service, or special features, or free posters,
or agree to pay express charges both ways, or they moke a
better price, in order to get the business, and, of course,
we try to do the same thing ourselves. It is exactly the
same as any other business where competition enters. The
factors are fighting for all they can got, and they are fight¬
ing for the best prices that they can get, and in a good
many sections of the country, I know of my own personal
knowledge, that our competitors are making more active
elforts than we are, to get our customers away from ns,
than we are from them. For instance, I know that in the
Boston office, the Mutual Company is now traveling six
men, who are going through New England for the purpose
of trying to alienate and get customers away from the
General. Filin Company. These are competitive methods.

These are the methods that are adopted in any business,
particularly in the business that is developing, and a busi¬
ness that is in its infancy, where conditions of stability
have not probably at yet, been reached.

Q. Are the Universal and Mutual Company continually
getting customers away from the General Film Company?

A. Oh, yes. That is a fact, that customers are going back
and forth from one concern to the other constantly and
repeatedly.

Q. And you are constantly getting their customers? A.

We are getting their customers, and they are getting ours.

Of course, we have some customers who' have been with us i ;
a long time, and who seem to' be entirely satisfied with
our films and our program, and their patrons prefer our

Frank L. Dyer, Direct. Examination. 1G89

films and have taken an interest in the popular actors that
£ we. put out, and they have stayed with us, but a large

number. of. theatres are shifting around all the time. They
will first try the General Film program, and then they
will got sick of that, and then they will try, the Mutual
program, and get tired of that, and then try the Universal
program and give , that up, and then come around to the
General Film program again, and it will be one round
from one exchange to the other,, constantly changing from
week , to week. . , ,

i Q. . So that there are three, distinct programs that are
being supplied to the motion picture theatres throughout
the United States and Canada, is that correct? A. .Three
distinct regular programs.

Q. One program supplied by the so-called licensed pro¬
ducers and importers, licensed-, by the Motion- Picture Pat¬
ents Company, the defendants in this cose? A. Yes.

Q. A program supplied by the Universal Company, which
is comprised of ten or more well known makes of films —
and a third program supplied by the Mutual, which is still
a third group of producers? A. I don’t , know what the
relationship is between the producers of these programs
and the distributors, but it is a fact that there are three
competing programs being distributed at the present time iii
active competition in the United Stntes. First, the General
Film program; second, the Mutual program; and third, the
Universal program. And it is the effortof these three com¬
peting companies to get as many theatres as they can to
use tlieir particular programs, and to pay the highest price
for those programs that- they can get.

Q. And the Universal exchanges will not supply to their
customers, pictures that are handled by the Mutual ex¬
changes, and vice versa, is that correct? A. That is
correct.

Q. They confine themselves — A. (interrupting): They
confine themselves ; to .their own, pictures;; .Their own
brands, making a complete program in every case, so that
0 their customers can get the particular variety of service

that they contract for. r

Q. And that is a trade custom or necessity in . the
• business that luis developed? -

Mr. Guosvbnor: I object id that as not clear. ;

3(190 1'itAXK L. Dybu, Djmwr Examination.

A.' It undoubtedly is the result of evolution, uud that
evolution is the growth toward greater and greater coni-
plexity, from the very simple fundamental germ of a_staglc
•eel that the theatre did not select, but took merely asm
matter of novelty, and the moving picture business ap-
"“•en ly developed from that germ until at * the present
time, instead of giving one reel to a theatre, wc : are able
to give them three or four reels every dun and

fas sscs™

way of this constant shifting of program, that we actually
have cases where !i theatre changes a program twice m
one day. ’! ,,

•Mr. CaldWell : As a matte.- of -convenience, I
. ’otter in evidence a list of the branches maintained
by the General Film Company at the present time.

■ • .Mr. OttOSVBNoa: Will this be identified by the

witness? ' , ,

By Mr. OALnw’Bt.t. : *

Q. Will you identify it? Is that a correct .statement
of the branches of the General Film Company nunntm^
todav1'. A. I am certain it is correct as far as the cities
are concerned, but I don’t remember the street address of
all of our branches.

The . paper offered is received in, evidence/ and
marked Defendants’ Exhibit. _No. 108, : and is as

_. follows:,, _ : ;,r.t t- ■ • • •• •»

■ Defendants’ Exhibit Nb. 108. E. H.

November lOtli, 191!!.

' 1 general film company- branches. > • • •

‘ : Albany,' N. Y., ’737 Broadway.

Atlanta, Ga., Rhodes Bldg. Annex..., . ...,.

Baltimore, Md., 329 ,\V., Pratt St. , ,, . ,

Bangor, Me:| 123 Franklin St.

Boston, Mass., 218 Commercial St.

Buffalo, N. Y., 122 Pearl St.

Fuank L. DvKtt, Dinner Examination.

1091

Butte, Montana, 30 E. Broadway.’ ’ 1

Calgary, Alberta, Canada, 85 McDongnll > Mlk.’

Chicago, Ill. (Wabash), 17-liLS. Wabash Ave. ■

Chicago, 111. (City Ilall), 139 N. Clark St.

Chicago, Ill. (American), 429 S. Wabash Aye.

Cincinnati, Ohio, S. E. Cor. 7tli & Walnut Sts.

Cleveland, Ohio., 1022 Superior Ave., N. E.

Columbus, Ohio, 20 W. Naghten St.

- Dallas, Texas, 1917 'Mniu St.

Denver, Colo., 1448 Champa St. - ’’ " "

Detroit, Mich., 71 Griswold St.

Houston, Texas, 807 Franklin St. -! ■ ’

Indianapolis, Iiid., 24 W.- Washington St. ” ' ’

Jacksonville, Fla., 355 St. James Bldg.

Kansas City, Mo., 921. Walnut St. "■ ■ • '' 1

Los Angeles, Cal., 727 S. Main St.

Memphis, Teun.y Lotus Bldg.

Milwaukee, Wis.,= 220- W. Water St. ’ '

» Minneapolis, 'Minn'., 909 Hennepin Ave.

Montreal, Canada., 243 Bleary St, ”

New Orleans, La., 840 Union St.

New York City (4tlr Ave.), 440 Fourth Ave.

New York City (23rd St.), 71 West 23rd St.

New York City (Peoples), 200 West 42nd St.

Oklahoma City, Okla., 211 West Second St.

Omaha, Neb., 208 S. 13th St.

Phoenix, Aria., 440 W. Washington St.

Philadelphia, Pa., 130S Vine St.

Pittsburgh, Pa. (Calcium), 119 Fourth Ave.

Pittsburgh, Pn. (Columbia), 430 Fourth Ave.

• Portland, Ore., OS Broadway,

Regina, Sask., Mclvor Bk. Rose & S. Railway Sts.
Rochester, Ni Y.', 501 Central Bldg., 158 E. Main St.

St Louis, Mo., 004 Chestnut St. ..

■Salt Lake City, Utah, 200 Floral Ave. '

San Francisco, Cal., 138 Eddy St. -
h Seattle, Wash., 819 Third Ave, ,

Spokane,' Wasli., 120 Wall St.

St. John, N. It., Canada., 122 German Si.

Syracuse, N. Y./ Hippodrome Bldg.

Toronto, Canada, 7 Front St., E. '

Washington, D. C., Bank of Commerce & Savings Bldg. •

1002

Frank L. Dyer, Direct Examination.

Wheeling, W. Vu., 1141 East Side Chaplina St.

Wilkes-Barre, Pa., 47 S. Pennsylvania Ave. f) ®

Winnipeg, Man., (Canada, 220 Phoenix Bik. . ■

Vancouver, B. C., Canada, 440 Pender St., W.

By Mr. Caldwell: ’

Q. Have you prepared a statement' of the exchanges
maintained by the Mutual Company? iA. Yes, sir..

Mr, Giiosvenor : Is this one of , the sheets you
have been using when you testified?

The Witness: Yes, sir. •,

Mr. Caldwell: I offer it in evidence.

The paper offered is received : in evidence and
marked Defendants’ Exhibit No. 100, and is as fol¬
lows : . t

Defendants’ Exhibit No. 109. E. H.

: MUTUAL EXCHANGES.

Amarillo, Tex., "Mutual Film Corporation, 304 East
4th St.

Atlanta, Ga., Mutual Film Corporation, Gl Walton St.

Baltimore, Md., Continental Film Exchange, 28 W. Lex¬
ington St. ' 1 ‘ 1

Boston, Mass!, Mutual Film Corporation, li'OG BOyl-
stou St.,

Buffalo,. N.Y., Mutual Film Corporation, 272 Washing¬
ton St. ' "

Butte, Mont,, Pacific Mutual' Filin 6orporation, Illinois
Bldg. ■ " * * ’

Calgary, Alberta, M.’F. C. of Canada, Linhain Block.'

Charlotte, N. C., Mutual Film Corporation, Coin. Nat
Bank Bldg. . .

Chicago, Ill.'; The Mutual Film Company, 5 SO. Wabash
Ave. 4 ■'

Chicago, Ill., II. & H. Fijm Service Co., 117 N. Dearborn

Frank L. Dyer, Direct Examination. 1(193

Cincinnati, Ohio, The- Mutual Film Compnny, 17 Opera
Pluce.

Cleveland, Ohio, The Mutual' Film Company, 108 Pros¬
pect Ave. S. E.

Columbus, Ohio, The Mutual Film Company, 422 N. High
St.

Dallas, Texas, Mutual Film Corporation, 1807 Main St.

Denver, Colo., Mutual Filin Corporation, 21 Iron Bldg.

Dcs Moines, Iowa, Mutual Film Corporation, Cohen
Bldg.

Detroit, Mich., Mutual Film Corporation, 97 Woodward
Ave.

El Paso, Texas, Mutual Film Corporation, 524 Trust
Bldg.

Evansville, Ind., Mutual Film Corporation, Keene Bldg.

Grand Rapids, Mich., Mutual Film Corporation, 7-8 Haw¬
kins Bldg.

Harrisburg, Penna., Mutual Film Corporation, Willough¬
by Bldg.

Kansas City, Mo., Mutual Film Corporation, Empress
Theatre Bldg.

Los Angeles, Cal., Pacific Mutual Film Corporation, 541
W. 8th St.

Memphis, Tenn., Mutual Film Corporation, Kallalier Bid.
5th FI.

Milwaukee, Wis., Western Film Exchange, 507 Enterprise
Bldg.

Minneapolis, Minn., Mutual Film Corporation, 440-445
Temple Court.

Montrenl, P. Q., M. F. C. of Canada, 154 St. Catherine St.

New Orleans, La., Mutual Film Corporation, 340 Caron-
dclet St.

New York City, Mutual Film- Corporation, • 71 • West
23rd St.

New York City, Western Film Ex. of N. Y. 145 W
45th St.

Oklahoma City, Okla., Mutual Film Corporation, 25
Hudson St.

Omaha, Neb., Mutual Film Corporation, 1417 Farriam St.

Philadelphia, Pa., Continental Film Exchange, 902 Fil¬
bert St. 4th FI.

Philadelphia, Pa., Mutual Film Corporation, 902 Filbert
St. 3rd FI.

1094 Frank L. Dyer, Direct Examination.

Portland, Ore., Mutual Film Corporation, 72 Broad¬
way St.

Kegina, Sask, Can., M. F. 0. of Canada, 312 Westman
Chambers.

Salt Lake City, Utah, Mutual Film Corporation, 15 Mc¬
Intyre Bldg.

San Francisco, Cal., Pacific Mutual Film Corporation,
162-04 Turk St.

St. John, N. B., M. P. C. of Canada, Waterloo St.

St. Louis, Mo., M. F. C., Benoist Bldg., 9tli & Pine Sts.
Seattle, Wash., Mutual Film Corporation, 1929 Second
Ave.

Sioux Falls, S. D., Jiutual Film Corporation, Y. M. C. A.
Bldg.

Spokane, Wash., Mutual Film Corporation, 408 First Ave.
Springfield, Mass., Jiutual Film Exchange, 179 Dwight
St.

Tampa, Fla., Mutual Film Corporataion, 405 Curry Bldg.
Toronto, Ont., M. F. C. of Canada, 5-G Queen St.

• Vancouver, B. C., M. F. C. of Canada, 329 Carrall St.
Washington, D. C., Jiutual Film Corporation, 428 Ninth
St. N. W.

Waterville, Me., Jiutual Film Corporation, Edith Bldg.
Wheeling, W- Va., Jiutual Film Company, 1502 Market
St.

Wilkcsbarre, Pa., Western Film Exchange, 61 S. Pennsyl¬
vania Ave.

Winnipeg, Jianitoba, M. F. C. of Canada, Aikens Blk.,
McDermott Ave.

OTHER .EXCHANGES USING THE JIUTUAL PRO-
gbaji.

Pittsburgh, Pa., Pittsburgh Photoplay Co., 412 Ferry St. :

By Jlr. Caldwell :

Q. Have you had a similar statement prepared of the
branches maintained by the Universal Company and , its
allied exchanges? A. Yes, sir. -

Q. Is that the statement that you have just produced?
A. Yes, sir.

Frank L. Dyer; Direct Examination.

1695

Mr. Grosvenor: Is this the statement you have
© been using in your examination?

The Witness : Yes, sir.

Jlr. Caldwell: I offer it in evidence.

The paper- offered is received in evidence and
marked Defendants’ Exhibit No. 110, and 1b as fol¬
lows :

Defendants’ Exhibit No. HO. E. H.

DISTRIBUTING OFFICES HANDLING UNIVERSAL
SERVICE IN UNITED STATES AND CANADA.

AR-IZ., Phoenix, California Film Exchange, Lewis Bldg.
ARK., -Ft. Smith, Universal Film & Supply Co.

OAL., San Francisco, California Film Exchange, 54 7th St.

Los Angeles, California Film Exchange, 110 E. 4th St.
COLO., Denver, Win. H. Swanson Film Co., Railroad Bldg.
CONN., New Haven, Universal Film Exchange of N. Y.,
850 Chapel St

DIST. OF COL., Washington, Washington Film Exchange,
428 9th St. N. W.

FLA, Tampa, Consolidated Film & Supply Co.

GA., Atlanta, Consolidated Film & Supply Co., Rhodes Bldg.
ILL., Chicago, Anti-Trust Film Co., 128 W. Lake St.
Laemmlc Film Service Co., 204 W. Lake St.

Standard Film Exchange, 172 W. Washington.

IND., Indianapolis, Central Film Service Co., 113 W.
Georgia St.

LA* Des Moines, Luemrale Film Service, 421 Walnut St.
KAN., Wichita, Universal Film & Supply Co., 155 N. Main
St.

KY., Louisville, Standard Film Exchange.

LA., New Orleans, Consolidated Film & Supply Co., Maison
0 Blanche Bldg.-

MD., Baltimore, Baltimore Filin -Exchange, ■ 412 E. Balti-

JIASS., Boston, New England Universal Filin Ex., 1100
. Boylston St. '

1G9G

Frank L. Dyer, Direct Examination.

Springfield, Universal Film Exchange of N. T., 317
Main St.

MICE., Detroit, Detroit Universal Film Co., 87 Woodward
Ave.

Grand Rapids, Universal Film Exchange, 5 Haw¬
kins Block.

MINN., Minneapolis, Laemmle Film Service, 252 A Henne¬
pin Av.

MO., Kansas City, Universal Film & Supply Co., 12th and
McGee Sts.

St. Louis, Universal Film & Supply Co., 8044 Pine St
MONTANA, Butte, Win. H. Swanson Film Co.

NEB., Omaha, Laemmle Film Service, 1312 Fnrnnm St.

N. J., Newark, Royal Film Exchange, 28G Market St.

N. Y., Albany, Rex Film Exchange, 7 Maiden La.

Buffalo, Victor Film Service, 39 Church St.

N. Y. City, Universal Film Exchange, 111 E. 14th St.
N. Y. City, Universal Film Exchange (Mecca Branch),
1000 B’way.

N. C., Charlotte, Interstate Films Co. - ■

O. , Cincinnati, Cincinnati Buckeye Film Exchange, 23G W.

4th Ave.

Cleveland, Victor Film Service, Prospect & Huron Sts.
Toledo, Toledo Film Exchange Co., 439 Huron St.
OKLA., Oklahoma City, United Motion Picture Co., 112 .
Main St.

ORE., Portland, Film Supply Co. of Oregon, 3854 Adler St.
PA., Harrisburg, Interstate Films Co.

Philadephia, Eagle Projection Co., 1304 Vine St.
Philadelphia, Interstate Films Co., 1304 Vine St.
Philadelphia, Philadelphia. Film Exchange, 121 N.
9th St.'

Pittsburgh, Independent Film Exchange, 415 Ferry St...
Wilkes-Barre, Exhibitors Film Exchange, G1 So. Penn
Ave.

TENN., Memphis, Consolidated Film & Supply Co., Falls
Bldg..

TEX., Amarillo, Universal Film & Supply Co.

Dallas, Consolidated Film & Supply Co., 1310 Elm St.
El Paso, Consolidated Film & Supply Co., 805 Miles
Bldg.

El Paso, Wm. H. Swanson
Bldg.

Film- Co., Little Copies

Frank L. Dyer, Direct Examination.

1G97

UTAH, Salt Lake City, Wm. H. Swanson Film Co., McIn¬
tyre Bldg.

W. VA., Wheeling, Universal Film Exchange.

WIS., Milwaukee.

WASH., Seattle, Film Supply Co., 1301 Fifth Ave.

Spokane, Film Supply Co., 211 Jones Bldg.

CANADA, Calgary Alta, Canadian Film Exchange, Monarch
Theatre Bldg.

Edmonton Alta, Canadian Film Exchange, Mon¬
arch Theatre Bldg.

Montreal, Quc., Canadian Film Exchange, 295
St. Catherine St.

Regina, Sask., Canadian Film Exchange, Rex
Theatre Bldg.

Saskatoon, Sask., Canadian Film Exchange, Hunt
Block.

Toronto, Ont., Canadian Film Exchange, 11 Rich¬
mond St. W.

i Winnipeg, Man., Canadian Film Exchange, Mon¬

arch Theatre Bldg.

Vancouver, B. C., Canadian Film Exchange, 516
Holden Bldg.

Sir. Grosvenou: Were these prepared by yourself,
or were they prepared by them? Did tliejr furnish you
with these lists, or did you make them up?

Tlie Witness: I made them up from my own information
that I could get, and from my own knowledge.

Mr. Grosvenor: I object to these last two state¬
ments, on tlie ground of insufficient knowledge on the
part of this witness, the sources of his information not
being disclosed.

By Mr. Caldwell:

Q. Do you happen to know, Mr. Dyer, whether that has
been compared with the advertisements of the Mutual and
Universal companies in the Moving Picture World? A. That
list lias been compared with the advertisements of those two
concerns in their own house organs or trade papers, but I

1098 Frank L. Dyer, Direct Examination.

know of my own knowledge and my information that I.gct,
of course^in the handling of the business that those branel es
that I have testified to do in fact actually e^i8t> Jv®

are encountering the competition in those territories that I
have described.

Mr. Caldwell : I offer in evidence a certified copy
of the Opinion of Judge Kolilsaat, filed in the case of
Thomas A. Edison against Selig Polyscope Company,
United States Circuit Court for the Noi^iern District
of Illinois, Eastern Division, mm'“ /

29tli 1910, as of October 24th, 190 r. This is the
opinion referred to in Mr. Dyer’s testimony on Mon¬
day, and I offer it in evidence because I am i’^01 mLlJ
that it has not been officially reported in the Fedeial
Reporter or in any other report, and I ask that it he
copied in the record for that reason.

Mr Grosvenor: I do not understand counsels
statement that it is filed January 29th, 1910, as of
October 24tli, 1907. When was the opinion handed
down? I object to the statement of counsel, im intro¬
ducing it, that it was the opinion referred toby tl. e
witness on Monday, the proper way i>eing .to show
the opinion to him and asking lnm to identify it and

connect it with this testimony.

Mr Caldwell: The certificate, of the Clerk, of
course, speaks for itself. It is marked and endorsed,
“Piled January 29th, 1910, as of October 24th, 1907.

Q. Is that the opinion, Mr. Dyer, to which yon referred
in your testimony on Monday? A. Yes, sir.

Mr. Grosvbnor : When was that opinion giveii, Mr.
Dyer?

The Witness : Well, in the latter part of 1907, and with
this date before me, I should say October 24th, 1907.

Mr. Grosvbnor : But do you know? »

Frank L. Dyer, Direct Examination. i°J1'
Mr. Grosvhnor: I object to it ns improperly

P,°Mr.‘ Caldwell: It is a certified copy under the
seal of the court and authenticated in such a way as
to entitle it to be admitted in evidence.

Mr. Grosvenor: I object to it also on the ground
it is immaterial.

The paper offered is received in evidence^ and
marked Defendants’ Exhibit No. Ill, and is as fol-

Defendants’ Exhibit No. 111. E. H.

Circuit Court op the United States for the Northern
District op Illinois— Eastern Division.

Selig Polyscope Company. J

BUI to restrain alleged infringement of re-issue patent
No 12,037, granted to Thomas A. Edison, September 3 ,
1902, for kinetoscope. The original patent was No .589,.
108, dated August 31, 1897. The cause ,s now before the
court on motion for preliminary injunction. This suit wa
November 7, 1902, and has been held by stip-
• nf the uar ies to await a decision of the United

States Circuit Court of Appeals for the Second Circuit in
a suTt to restrain infringement of the patent herein in¬
volved, brought by the complainant herein ugamst American
Mutoscope and Biograph Company, it being agreed that
Se Son in that case would have an important bearing
upon the questions involved herein. It was stipulated that
hnldinc of •■•this case until after final hearing of the
New York case should not prejudice complainant’s right to
move for a preliminary injunction at any time.

On March 5, 1907, the Circuit Court of Appeals for the

Frank L. Dyer, Direct Examination.

Second Circuit rendered a decision finding Claims 1, 2
and 3 of tlie patent valid and infringed. The testimony
taken in that case, has, by stipulation, been made a part
of the record in the case at bar,, and this, as well as the
opinion of the Court of Appeals, shows a full hearing
upon the merits. The validity of the patent in suit may,
therefore, for the purposes of this hearing be considered
as established.

Defendant admits the use of two kinds of machines,
both of which are charged to infringe patent in suit; one of
these is made in accordance with Letters Patent No. 712,-
402, issued October 28, 1902, to William N. Selig for
improvements for exhibiting and taking pictures; the
other is what is known as the Lumicre camera, which is
the one described and. claimed in Letters Patent of the
United States No. 579,882, issued March 30, 1897, to A.

& L. Lumiere of Lyons, France.

The present motion is based upon the pleadings and
proofs heretofore taken in this case, the testimony and
evidence taken in the suit against the American Mntoscope
and Biograph Company, the pleadings and decision of
the Circuit Court and the Circuit Court of Appeals for the
Second Circuit, and certain affidavits. Models of the
Selig camera, the Edison camera, and of the infringing
device of defendant in the mutoscope case, supra, known
as the Warwick camera, are before the court, and the
affidavits of experts have been presented on behalf of
complainant to show that the Selig and Lumiere machines
of defendant herein are substantially identical in material
respects with the Warwick camera of the New York case.
Defendant makes no attempt to rebut this evidence, biit
urges that either of the following grounds is sufficient to
warrant the denial of this motion.

1st. That defendant is operating under a patent issued
to it October -28, 1902, on an application filed September
6, 1900, which exactly describes and exactly claims the
combinations charged to infringe! Both complainant and
defendant, therefore, have patents for their respective
machines. “In such cases,” says counsel for defendant,
“the courts have held times without number, that there'
was a presumption that there was a substantial or ma-

Frank L. Dyer, Direct Examine

1701

terial difference between the inventions, and that one did
not infringe the other.”

2nd. “Defendant’s machine charged to infringe the
Edison reissue patent sued on, was made and put into use
long prior to the application for the reissue, was not an
infringement of the claims of the original Edison patent,
was made and put into use rightfully, because not. an in¬
fringement of any valid claim of the original Edison patent,
and is entitled to protection under the doctrine of inter¬
vening rights.”

That there is such a presumption in favor of the later
patent, as stated in defendant’s first ground, must be ad¬
mitted. It is not, however, a conclusive presumption, and
there may be evidence to overcome it.

The second ground urged by defendant to defeat this
motion can, of course, only apply to acts occuring prior
to the reissue. It would seem a good defense ns to those
acts. Defendants, however, admit in the affidavit of Will¬
iam N. Selig, the sale, since the reissue, of one camera
made under the Selig patent, and the purchase and use of
three Lumiere cameras. An injunction does not affect past
acts; it is designed for the prevention of those which might
l>e committed in the future, and if defendant’s device be
found to infringe complainant’s patent, the admitted use
Bince the reissue would seen) sufficient ground to restrain
such future acts. The sole question before the court then
is: Do the Selig and Lumicre machines infringe the Edison
reissue patent in suit?

The original patent, No. 589,168, was before the Court
of Appeals for the Second Circuit in a suit between the
same parties and after a full hearing, Claims 1, 2, 3, 4,
and 5 were held invalid, as claiming more in view of the
prior art than patentee was entitled to. The court there
found that Edison “was not a pioneer, in the broad sense
of the term,” and said that the real invention, if it in¬
volved invention ns distinguished from improvement, prob¬
ably consisted in details' of organization, by which the capa¬
city of the reels and moving devices are augmented and
adapted to carry the film of the patent rapidly and proper¬
ly (11.4 Fed. Kep., 926). The patentee, thereupon applied
for and obtained the reissue patent in suit, Claims 1, 2,
and 3 of which are as follows:

Frank L, Dyer, Direct Examination.

“1. An apparatus for taking photographs suit¬
able for the exhibition of objects in motion, having Q

in combination a camera having .n single stationary
lens; a single sensitized tape-film supported on
opposite sides of, and longitudinally movable with
respect to, the lens, and having an intermediate sec¬
tion crossing the lens; feeding devices engaging such
intermediate section of the film and moving the
same across the lens of the camera at a high rate
of speed and with an intermittent motion; and a
shutter exposing successive portions of the film
during the periods of rest, substantially as set. foi-tli;

“2. An apparatus for taking photographs suit¬
able for the exhibition of objects in motion, having
in combination a camera having a single stationary
lens ; a single sensitized tape-film supported on op¬
posite sides of, and longitudinally movable with
respect to, the lens, and having an intermediate sec¬
tion crossing the lens; a continuously-rotating driv¬
ing-shaft ; feeding devices operated by said shaft en¬
gaging such intermediate section of the film and
moving the same across the lens of the camera at
a high rate of speed and with -an intermittent mo¬
tion; apd a continuously-rotating shutter operated by
said shaft for exposing successive portions of the
film during the periods of rest, substantially as set

“3. An apparatus for taking photographs suitable
for an exhibition of objects in motion, having in
combination a camera having a single stationary
lens; a single sensitized tape-film supported on op¬
posite sides of, and longitudinally movable with
respect to, the lens, and having an intermediate sec- ’ '
tion crossing the lens; a continuously-rotating driv¬
ing-shaft; feeding devices operated by said shaft en- .

gaging such intermediate section of the film and O'

moving the same across the lens of the enmera at a
high rate of speed and with an intermittent motion;
a shutter exposing successive portions of the film .
during , the periods of rest.; and a reel revolved by

Frank L. Dyer, Direct Examina

L703

said shaft with variable speed for winding the film *
thereon after exposure, substantially as sot forth.”

The invention is a narrow one, and the proper interpre¬
tation of the claims, so as to confine the patentee to his
real contribution to the art, has been, as the decision of
the Circuit Court and the Circuit Court of Appeals show,
a matter of no little difficulty. But the Court of Appeuls
lias construed the claims of the patent, and it has been
held that on a motion for preliminary injunction the
court should be “guided and governed by the construction 0
which was given to the patent in the adjudicated case
upon which the special presumption of validity is based,
Walker on Patents, Sec. 676, citing Mallory Mfg. Company
v. Hickok, 20 -Fed Rep., 116 ; Carter-Crume Co. v. Ashley,

68 Fed. Rep., 379, “and where the facts are substantially
the same in the two cases, the former decision will be
followed. S. S. White Dental Mfg. Co. v. Johnson, 50
Fed Rep., 263. The Selig and Lumiere cameras nre sub¬
stantially identical with the Warwick camera in those
features found by the Court of Appeals to be of the essence
of the invention of Edison. The description which the 8
Circuit Court of Appeals of New York applied to the
Warwick camera may be applied literally to defendant’s
Selig camera. The court said :

“The engaging rollers, which advance the film
after it has pased the film-slide or guide where ex¬
posure is made and which deliver it to the take-up
reel are located about half way between the take-up
reel and the film-slide and their movement is so reg¬
ulated as to other parts that, there will always be
a loop of slack film between said rollers and the 4
film-slide. In consequence, the film cannot be ad-
.. vanned by any revolution of these rollers, as was the
case with the Biograph enmera. The film as it
comes from the delivery roll has a row of holes
along each edge; when it is in the film-slide these
holes are engaged by means of a reciprocating two-
tined fork, carrying small studs or pius which pass
into the holes on the opposite edges of the film, in
the same way as the sprockets pass into the holes
in the complainant’s machine. As these studs or

1704 Prank Jj. Dybii, Direct Examination.

pins are inserted on .the down stroke of the fork
aud withdrawn on the up stroke, the Him is inter¬
mittently fed across the field of the lens. These
pins or studs do not hold back the film against
any forward pull, because there is no forward
pull to he resisted; neither an intentional forward
pull as found in the biograph, nor an accidental
or occasional forward pull as when the film is taut
between the film-slide and take-np roll as found
in the camera of the patent; when the pins are
withdrawn the film lies inert in the film-slide.”
But the ‘intermediate section* is moved across tiie
lens just by the interlocking engagement between a
sprocket or pin and a hole in the film, thereby
moving it positively, regularly, evenly and very
rapidly without jarring, jerking or slipping — the
parts being arranged so that the movement shall
be intermittent.”

The Limiiere machine lias no take-up reel, the film
being allowed to lie lossely in the bottom of the box, and
there are no rollers engaging the film, either before or
after exposure. It does have the fork with the studs or
pins, and its mode of operation is otherwise the same ns
that of the Warwick camera, ns above described by the
Court of Appeals.

The motion for a preliminary injunction is, therefore,
granted.

(Endorsed) Filed .Tan. 29, 1910, as of Oct. 24, 1907.

H. S. STODDARD,

Clerk.

United States Disthict Court fob the Northern
District of Illinois — Eastern Division.

I, T. C. MacMillan, Clerk of the District Court of the
United Stutes of America, for the Northern District of
Illinois, DO HEREBY CERTIFY the above and foregoing
to be a true and correct copy of the OPINION of Hon.
Judge C. C. Koklsaat, filed Jan. 29, 1910, as of Oct 24,
1907, in the case of THOMAS A. EDISON v. SELIG

Evidence.

L707

' IN THE

DISTRICT COURT OP THE UNITED STATES
For the Eastern Distbiot op Pennsylvania.

New Tobk City, November 18, 1013.

The hearings were resumed pursuant to adjournment
at 10:30 o’clock A. II., November 13, 1013, at Room 130,
Manhattan Hotel, New York City.

Present on behalf of the Petitioner, Hon. Edwin
P. Gkosvbnob, Special Assistant to the Attor¬
ney General.

J. R. Darling, Esq., Special Agent.

Present also, Messrs. Charles F. Kingsley, George
R. Willis and Fred R. Williams, appearing
foi' Motion Picture Patents Company, Bio¬
graph Company, Jeremiah J. Kennedy, Harry
N. Marvin and Annat Moving Picture Com¬
pany.

J. H. Caldwell, appearing for William Polzer,
General Film Company, Thomas A. Edison,
Inc., Kalem Company,- Inc., Patlie tFreres,
Frank L. Dyer, Samuel Long and J. A. Berst.

Mr. Henry Melville, attorney for George Kleine,
. Essnnay Filin Manufacturing Company, Selig

Polyscope, George K. Spoor and W. N. Selig.

Mr. James J. Allen, appearing for Vitagraph
Company of America, and Albert E. Smith.

The Examiner :■ Defendants’ Exhibit No. Ill,
being certified copy of the opinion of Judge Kohl-

1708 Frank L. Dyer, Direct Examination.

Frank L. Dyer, Direct Examination. 1700

saat, in case of Thomas A. Edison v. Selig Polyscope
Company, United States Circuit Court for the North¬
ern District of Illinois, Eastern District, has been
returned to Mr. Caldwell.

Thereupon FRANK L. DYER resumed the stand.
Direct examination continued by Mr. Caldwell:

Q. Mr. Dyer, in testifying yesterday about the terri¬
tory served from your office maintained at Oklahoma City,
Oklahoma, at page 1070 of the record, folio 1, you stated
that that territory included some towns in the northern
part of Texas, and some customers, as yon recalled, in Ar¬
kansas and Indian Territory. Did yon mean Indian Terri¬
tory? A. No, the fact had momentarily slipped my mem¬
ory that tlie territory of Oklahoma and the Indian Terri¬
tory were united and constituted the State of Oklahoma.
I should have said the Indian counties of Oklahoma.

Q. In testifying yesterday, your recollection was not
quite clear as to the territory served by your competitors
from branches maintained by them at Amarillo, Texas.
Have you since refreshed your recollection on that sub¬
ject? A. I was not certain whether the Amarillo branches
of our two competitors competed directly with onr Dallas
branch,, or whether direct competition existed. Amarillo
is a town in the Panhandle of Texas to the west of Okla¬
homa City, and eastward from Mexico. It lies within the
territory circumscribed by our Dallas, Oklahoma City and
Denver branches, where our competitors are also located.
Their branches at Amarillo are, therefore, more directly in
the center of this territory than we are. In other words,
we have to reach into the territory from the outside, to¬
wards the center, whereas they not only reach in from
the outside towards the center, but reach outwardly from
the center to the circumference of the territory.

Q. You stated yesterday, some of the benefits or ad¬
vantages resulting to the public from the organization and
operation of the Motion Picture Patents Company. . Have
you anything to add to that statement? A. Yes, I would
like to make a further addition, because the matter, I think,
is important. The formation of the Patents Company, with
the resulting development in the building of new theatres,

and extending the number of theatres, small theatres, places
where the poor man might take his family in the evening to
see a clean, instructive, and entertaining show. The sa¬
loon is no longer the poor man’s clnb, and all over the coun¬
try it will be found .that the moving picture theatre has
seriously interfered with the saloon business. In fact, our
most bitter opponents are the saloon interests, and I know
of one case in Ohio where the number of saloon licenses
was reduced from thirty-two to seventeen, owing to the
presence in that town of moving picture theatres. Whereas,
formerly the poor man would go to the saloon and spend
the evening, paying twenty-five cents for beer, he now takes
his family to the moving picture show at the same price.

Q. You have spoken about the General Film Company
and its branches. Where is the main office of the General
Filin Company located? A. At No. 200 Fifth Avenue, in
the Fifth Avenue Building, New York City.

Q. Are any motion pictures distributed from that office?
A. No, sir, that is purely an executive and administrative
office, where the bookkeeping department is located, and
the other executive departments.

Q. When a branch of the General Film Company orders
pictures from a producer, or importer, are the pictures sent
hy the producer, or importer, first to the main office of the
General Film Company, or to some warehouse or other
place maintained by it, and sent from there to the branches,
or are the pictures sent direct from the producer and im¬
porter to the branch? A. The plays are sent direct from
the producer to the branch.

Q. Mr. Dyer, will you explain in detail the practical
workings of an exchange, just how a film is received from the
jiroducer or importer, what becomes of it after it is received,
how the films are booked by the booking office of the branch,
how they are sent from the branch to the exhibiting theater,
and how they are returned by the exhibiting theater to the
brunch, and what becomes of the films in the interim between
their return by one exhibitor and the delivery of that same
film to another exhibitor? A. Each branch of the General
. Film Company is a distributing point or booking office, occu¬
pying a middle position between the producers of the pic¬
tures and the theatres in which they are shown. At each
branch there iB a stock of films kept in the usual cylindrical
boxes, and generally is fireproof vaults, so ns to minimize the

1710 Frank L. DvEn, Direct Examination.

Fkank L. Dyer, Direct Examination. 1711

danger from fire. New films are coming into the branch from
the producers almost daily, and old films are, after the lease
period has expired, returned to the producers, generally
monthly. So that the stocks of films do not materially change
except that there is a slow growth due to the gradual increase
of the number of films released. When the film is received
from the producer it is generally inspected so as to be sure
that it is in good condition, and it is then numbered by means
of a perforating machine, sometliing like a check punch, so
that it can be identified. It is then placed in the stock in its
proper place. At each branch there are one or more bookers
who are the men who have the duty of mnking up the pro¬
grams of the theatres, and whose job it is to keep the films
working as actively as possible. These bookers are supposed
to have a general knowledge of the character of the films made
by the several producers, and are also required to keep them¬
selves informed as to the character of individual films so that
they will know the kind of plays they are handling. They are
also required to know the general character of the theatres
that they supply so as to make the programs as appropriate
as possible. Where an exchange necessitates the employment
of more than one booker, each booker has his own iist of
exhibitors that he handles. In most of the exchanges there
are definite booking systems in vogue so ns to keep a written
record of the films to enable the manufacturers to tell
whether they are being properly worked or not; and these
booking systems differ more or less in the various branches.

A theatre requiring service of a branch arranges with the
manager to receive, a certain number of films per week,
changed a definite number of times, and the age of the film
is determined entirely by negotiations between the theatre
and the manager. Sometimes requests are made for ages of
film that we are not able to supply, so that some adjustment
in this respect has to be made. The booker is advised of the
age of the film the particular customer has contracted for,
and endeavors, as far ns possible, to supply films of that age,
and to make the program balance, and as inteersting nnd as
adaptable as possible to the conditions of the particular # 1$

theatre. In the case of theatres located in the same city as the

branch, or in the neighborhood of that city, the theatres gen¬
erally send messengers into the branch to get their films in
the forenoon, but in other cases the films are sent to the ex¬
hibitors by express. Packing cases are used containing gen¬

erally three reels, nnd each case is marked with the number
0 (l|> corresponding to the particular customer. In some places,

and particularly in New York, the General Film Company
maintains, or has made arrangements with an agency to col¬
lect shows from the theatres in the city, after they have been
exhibited, and bring them back to the exchange, but ordi¬
narily the theatre sends the film back to the branch either by
a messenger or by express. In a few of the very active ex¬
changes, as, for example, the exchanges in Philadelphia, New
York, Boston, Chicago and other large cities, the films are

coming back into the exchange from about midnight onwards,

nnd as soon ns they are received they are inspected carefully,
and any repairs made, and placed in stock, so that they can
go out by eight o’clock in the morning. I think that in almost
all the branches they maintain night shifts, so that the
branches are working generally at all times. In those
branches where poster departments are located, when we
send out the films by express we also include the necessary
posters contracted for, or, if the messenger of the theatre
calls at the branch, he gets the posters at the same time, and
takes them with him. The great problem, as I have stated
before, is to handle an enormous number of reels of great
variety, involving many changes per week, and to deal with
the number of theutres in such a way that the films will be
moving to the maximum extent. In the whole country, I
should say, that there are at least twenty thousand moving
. picture plays moving every day towards —

Mr. Grosvenob (interrupting) : You don’t mean
plays? .

The Witness: Plays or films?

Mr. Grosvenoii: Different plays?

The Witness: Different plays.

Mr. Guosvenor : You don’t mean under different
titles? 4. .,

Mr. Kingsley : I object to the witness being told
what he means.

Mr. Grosvenor : I was trying to have it clear
on the record.

1712 Prank L. Dyer, Direct Examination.

The Witness: Yes, I think twenty thousand would be
within the bounds of safety. Twenty thousand moving pic¬
ture plays, moving at all times from or towards theatres,
and back to the exchanges.

By Mr. Caldwell :

Q. Does it sometimes happen that an exhibitor will fail
to return a picture the following day, in time for you to
use it with a customer who has contracted for it, for that
particular day? A. That sometimes happens, yes, sir.

Q. With more or less frequency? A. Well, 1 presume it
seems more than it is, because there is always so much
noise over it, because it seems like a very important thing,
for if a theatre has a film booked for a certain evening, and
lie comes down to the office and finds that he cannot get
the film, it is naturally very annoying to him. This hap¬
pens, sometimes, by faults of express companies.

Q. But whenever it does happen, does it represent an
actual loss to the exchange? A. Oh, yes, that means that
we lose that particular film for that time, and we always
have to give the exhibitor something to take its place, of
equivalent age, and endeavor to satisfy him with a substi-

Q. Where the exhibiting theatre is located at some dis¬
tance from the exchange, or branch, are films always re¬
turned by the exhibitor to the exchange before they are
sent out to the next exhibitor? A. Not alwuys, but ordi¬
narily so. As I stated yesterday, in Florida, we send out
reels on a circuit, and they may go to eight or ten ex¬
hibitors before coming back to the exchange.

Q. Does, the period of transit there represent a loss to
the exchange? A. Theoretically, it would not represent a
loss, but in actual practice it does, because it is difficult
to get a theatre to take the same interest in keeping the
films moving, as we have, and, while the films ought to
be passed around the circuit in ten days, we find that it
will frequently take n month.

Q. I think you have stated that the maximum value of
film to the exchange, is based upon its constant use’ A
That is true.

Q. If more or less time is lost during those periods of
transit back and forth, does that not represent so much

■€>

Frank L. Dyer, Direct- Examination. 1718

earning power deducted from the film? A. Oh, yes. I
thought you had in mind only the circuits. Of course,
where the film is in transit there is a loss in its earning
power.

Q. Have you stated yet, Hr. Dyer, what facilities are
maintained at the branches of the General Film Company,
for inspecting, cleaning, and repairing film between these
periods of use in the theatres? A. Yes, we maintain at
each branch an inspection department, generally of two or
three shifts, so tliut they keep working all the time, com¬
posed of from two to ns many ns fifteen girls, or young
men, and each reel coming in is carefully unwound by
these inspectors, who run the film between their thumb and
forefinger so as to detect broken places in the edges, and in
case the break is a bad one, a splice is made, and these
inspectors also carefully inspect the film, see that it is
kept clean, free from dirt, and kept in good condition; and
in some branches they actually use cleaning machines that
subject the film to a cleaning operation, to wipe off the
dirt and oil. A great deal of oil gets on the film from the
projecting machine, and this oil collects dirt and dust,
that makes spots on the film, which show on the screen.

Q. Do you know to what extent exchanges, prior to the
.formation of the General Film Company, maintained facili¬
ties for inspecting, denning, and repairing films? A. Not
any more than to say that any inspection or repairing, as
far as I knew, was less effective than that used by the
General Film Company, or none at all.

Q. Will you state in what receptacles these films are
placed by the producer, or importer, in order to be sent
to the branches of the -exchanges? A. In tin boxes.

Q. And what, is the weight of a single reel of a thou¬
sand feet in a box, including the box? A. I have for¬
gotten, but I think somewhat over five pounds.

Q. Do you know whether any of these boxes are ever
sent by parcel post? A. I do not.

Q. In sparsely settled territory where you could not
serve a theatre, either by messenger or by express, it is
feasible to serve by parcel post? A. I am not aide to
state. I think it might be.

Q. Mr. Dyer, do you know of a single city or town
anywhere in the United States with a population sufficient
to support a- motion picture theatre in which no 'such

1714: Fuanic L. Dyer, Direct Examination.

theatre is located? I asked you if you knew of any such
city or town? A. No, I do not. The only city that I know A $

of that came near fitting your definition, is iny own town of
Montclair, where we built a moving picture theatre for
the first time this year, but Montclair did not have trolley
cars until about five years ago.

Q. Do you know of any city or town in the United
States, where a motion picture theatre is now being con¬
ducted that cannot obtain its service either from the
General Film Company, or one or both of its competitors?

A. No, I do not.

Q. And it is entirely optional with any such theatre
from which exchange it will take its service? A. Yes, ab-
solutely so.

Q. And the theatre is entirely free to decide that ques¬
tion for itself? Is that correct? A. That is correct, ex¬
cept that the Mutual Company has, in a certain number of
places, sold the exclusive right to its service, which would
prevent other theatres possibly from getting the Mutual
program in those particular localities, bnt with that ex:
ception, I know of no reason why any theatre in the
United States should not be able to get its service from
either of the three companies.

Q. Mr. Dyer, you have testified relative to the competi¬
tion which the General Film Company has. with its two lead¬
ing competitors, the Mutual Company and the Universal
Company. Has it any other competition, particularly in the
matter of special feature films for special service, or exclu¬
sive service, nnd if so, will you please state what it is? A.

We have a great deal of competition in this respect. These
feature films have been appearing in greater and greater num¬
ber in this country, and are bundled by various people, such
as the Famous Players Film Company, Warner Features
Company, and the various State rights concerns, that is to •'
say, people who have acquired the right for a particular
State, or series of States, in certain films. I refer to such
features as “Cleopatra” by the Helen Gardner Company,
pictures made by the Gene Gauntier Company, nnd many 0

others. The trade papers are filled with advertisements of
these films. Our theatres are using these films to quite a r-
considerable extent, nnd their introduction into our theatres
of course reduces the value of our service or entirely sup¬
plants it. For instance, we have theatres in the country

FnANK L. Dyer, Direct Examination. 1715

who are taking the Famous Player service, and, as I recall, 1
this takes away our revenues for three days every other
week. The introduction of these speciul features iuto the
service of our theatres is quite an important fnctor at the
present time in the business.

Q. Do you know what the Famous Plnyers Film Com¬
pany, for instance, are doing l>y way of competition with the
General Film Company, and who are interested in it? A.

The Famous Players Company is a concern managed by Mr.
Daniel Frohmnn, nnd they are mnking a series of thirty films
per year, two in one month, and three in the next month.
These films are based on famous plays, such as the “Prisoner 2
of Zendn,” the “Tess of the D’Aubervilles,” “In the Bishop’s
Carriage,” etc., and generally a well-known star appears in
each one, such as Mrs. Fiske. These plays are generally from
three to five reels. The Famous Players Coinpnny makes
arrangements with theatres, nnd very often with our cus¬
tomers, to take their service for a year, nnd the films appear
m our theatres generally every other week for from one to
three days.

Q. And when they do appear in your theatres, the Famous
Players Company is depriving you of that service during that , „
time; is that correct? A. That is not only correct, but, it is 3
also a fact that owing to the expensive character of these Fa¬
mous Players films generally the theatre reduces the price,
or curtails its service with us; takes on a cheaper service
from the General Film Company.

Q. In what class of theatres is that service customary?

A. Generally in the large theatres.

Q. So that to that extent these people are taking away
from you your best customers; is tlint correct?

Mr. Grosvenoii: Objected to as lending, aud too i

general. ~T-

Mr. Cardweli. : It is withdrawn.

By Mr. Caldwerl:

Q. State what character of customers you are losing as a
result of the competition of the Famous Players Company?

A. I do not say we are losing customers— I say we are losing
business, and losing money. •

Q. From what class of your customers? A. Generally
the very large theatres'. . ■

1710 Prank L. Dyer, Direct Examination.

Q. Do you know in wluit territory the Famous Players
Filin Company are operating? Is it limited to Hew York 0

or Chicago, or is it general throughout the country? A.

General throughout the country. I know specitically that
they are competing with us in the Hew England territory, in
the Atlanta territory, in the Chicago territory, and in the
California territory and elsewhere.

Q. And what is the character of the sendee maintained by
the Warner Feature Film Company? A. That concern
handles feature films made either in America or abroad, and
puts them out in as many theatres and at the best prices they
can get. I do not think they Imre started a regular defined
sendee as yet, although they are advertising that they expect
to do so. They have offices all over the country, and men
going around among the exhibitors trying to interest them
in their feature films.

Q. Is it not a fact that this concern or its predecessor
in business, 1ms been actually supplying special feature films
throughout the United States or in portions of the United
States? A. Yes, sir.

Q. Do you kuow auything about the business conducted
by the Exclusive Supply Corporation? A. Ho, sir, I do not.

Hot specifically. I do not know of any instances where those
films have been specifically brought to my attention.

Q. Do you know whether the Famous Players Film Com¬
pany supply an exclusive service? A. Oh, yes.

Q. Explain what is meant by exclusive service as applied
to the motion picture business. A. An exclusive service
would be one in which the guarantee goes with certain films
that they will be shown exclusively in a single theatre in a
given territory.

Q. And if shown at another theatre, of course the service
loses its exclusive character, does it not? A. Yes, sir.

Q. And loses entirely the value which was contracted .
for? A. Very largely.

Q. Mr. Dyer, 1 would like you to read portions of the
testimony of the witness Swanson, a witness called on be¬
half of the petitioner, as 1 wish to ask you some questions -0

about it. AVill you read pages 329 and 330, commencing at
folio 3 on page 329? A. (witness reading) : Yes, sir, I have
read this testimony.

Q. How, will you read page 3G9, Mr. Dyer? A. Beginning
at what point, Mr. Caldwell?

Frank L. Dyer, Direct Examination. 1717

Q. Beginning at the top of the page, and reading down 1 I

Yes, sir. . . j ;

Q. How, will you read the top of page 801? A. (witness
reading) : Yes, sir, I have also read this. j.'i|

Q. Mr. Swanson quotes you ns saying at the Film Service | 5 :

Association meeting, as follows : “Mr. Dyer did most of the \%

explaining regarding patents, and the idens of what' they | jv

were going to do under those patents. They were going to
charge more for the film and more for the projecting mn- S|

chines under those patents.” Do you recall whether you Ik?

made that statement or not? A. Ho, sir, I did not make 2
tlint statement. |||

Q. Continuing, the witness says : “He further explained f|

that wo must always bear in mind tlint we were not to put ||

.too much stress on the patents, however, that the proposi- f§|

tion that they had formed was ninety-five per cent, commer- -If

cinl and. five per cent, legal, that is, that this formation was ||

ninety-five per cent, commercial and five per cent, legal, tlint
they had patents, but that there had always been more or
less litigation over this thing, and perhaps always would be,
lmt that the success of the entire matter depended upon the „
commercial organization.” Do you recall whether you made
any such statement ns that? A. Ho, sir, I do not recall hav¬
ing made that statement. I do not recall having made any
attempt to weigh specifically the advantages of the patents
and the advantages of the commercial results growing out of
the patents. I recognized, of course, tlint. the value of the
patents would not be so great as the development of the com¬
mercial side, or, in other words, that any contribution that
might be made under the patents would be small compared
to the commercial advantages accruing from the arrangement
that brought an end to the patent litigation, but I do not 4
recall specifically having attempted to state the two proposi¬
tions in terms of percentage. If Mr. Swanson means by his
testimony tlint we looked upon the patents ns unimportant,
that is) entirely incorrect, because the patents at all times
© were regarded by us ns the basis,, the very foundation, upon

which the licensing plan rested.

Q. Again, at page 309, he quotes you as having made the
same statement at the meeting of the Film Service Associa¬
tion in Buffalo. I think you have already stated 'that you
.were present at’ that Buffalo 'meeting. Did you make any

1718 Prank L. Dybii, Direct Examination.

such statement as that at the Buffalo meeting? A. Not that
I recall, no, sir. 1 always recognised that the contribution 0

paid under the patents would be less than the resulting com¬
mercial advantages.

Q. Again, on cross examination, at page 801, lie says thut
it was a favorite expression of yours, “Five per cent, legal
and ninety-five per cent, commercial,” and through the
medium of the putents they could bring about a commercial
organization that would be beneficial to those interested.

Was that a favorite expression of yours? A. I don’t think
so, although I always recognized, of course, that the value of
the patents would necessarily depend only upon the commer¬
cial success which our licensees met with, or, in other words,
unless they succeeded commercially, we wonld not profit
under the patents.

Q. Mr. Dyer, will you turn to page 330 of the record,
commencing at the middle of the page, at the question asked
by Mr. Grosvenor, and reading to the bottom of the page.

A. Yes, sir, I have read this before.

Q. So your recollection is refreshed? A. Yes, sir.

Mr. Giiosvbnoii: Which is it, what Mr: Swanson
testified is refreshed —

The Witness (interrupting) : Yes, sir. I read this this
morning. This is one of the things that Mr. Caldwell asked
me to read.

By Mr. Caldwell:

Q. Mr. Swunsou there states that he came here us a
committee of one, representing all of the Edison film ex¬
changes in Chicago, that he arrived on Saturday, the exact
date, he cannot recall, and called you up on the telephone at
Orange, to make an appointment, as he stated, “to discuss
conditions under those patents, which we proposed to make
to iiim.” That you were going hunting; and would hot be
back until Monday, and asked him to submit his proposi- A

tion over the telephone, mid he then said — now quoting his W

exact language: “We, in Chicago, have decided that we . .
will combine our business and make, the Edison Company a
present of one-half of all our interests in our combined
business, if they can show us where they. can shut out the

Frank L. Dyer, Direct Examination. 1710

independent competition we are now having in Chicngo.”
© He continues by saying that, quoting you, “He said that

was a great idea. Hoi had not thought of it, but that he
would work it up as soon ns he came back from his hunting
trip, and he thought very likely it could be accomplished,
and it later was, except that they bought the exchanges out
altogether.” State what truth, if any, is there in this
testimony? A. I do not think there is nny truth in it.
I do not recall having had nny conversation with Mr.
Swanson over the telephone at any time. I am quite sure
that I never met Mr. Swanson more than three or four
times in my life, although I remember very well that the
second time he met me he cnlled me “Frank,” and has
always done so.

Mr. Grosvenor : And you cnlled him “Bill” yes¬
terday, when you referred to him, in examination?

The Witness: I reciprocated the compliment, yes, sir.

A. (continuing) : I never went hunting in my life, so
that he is certainly wrong in that statement. I nin certain
that lie never made any suggestion to me about giving
the Edison Company a present of half of the exchanges
in Chicago. That would have been a very silly sugges¬
tion, indeed, and I am quite certain that. Swanson never
could have made it. In whatever talks I may have had
with Swanson, or anybody else, on the subject bf independ¬
ent competition in Chicago, I always had in mind the possi¬
bility of stopping this by patent suits, and in no other
way.

Q. Now, will you read pnges 325 and 32(1, commencing
on page 325, near the top of the page, the first question
by Mr. Grosvenor? A. (witness rending) : Yes, sir, I have
read, this testimony.

Q, In connection with the suits brought, by the Edison
Company against Kleine and his licensees in Chicago in
, 1908, Swanson says that he had several conversations with

cutting prices of films to a ruinous basis, and you said you
thought you could find a way of stopping it. He asked
you how, and you said you would have an attorney in Chi¬
cago bring suits against Kleine’s exhibitors, that, your
•purpose was to bring a multiplicity of suits and harass

17120 Frank T* Dyer, Direct Examination.

Frank L. Dver, Direct Examination. 1721

them to such nil extent, that, they would eventually stop
using Heine's goods, that you stated tlmt these suits
were brought for the purpose of intimidating exhibitors.
Further, that you wanted to find exhibitors or defendants
that did not have too much money, hut had some resources,
and were responsible, as they would have more regard for
the dangers of litigation than some more irresponsible
exhibitors, and that you had Mr. Mithin, who wns western
. secretary of the Film Service Association, ns he says, In¬
vestigate the financial standing of the exhibitors before
suit wns brought. State what truth there is, if any, in the
foregoing testimony? A. I do not think there is very
much truth in it. My recollection is that Kleine did not
cut prices, and that the troubles in Chicago were due en¬
tirely to the price-cutting and unfair competition on the
part of the licensed exchanges. A number of the suits,
a considerable number of the suits, were brought in Chi-
engo, against, infringing theatres, but these suits were
brought for the purpose of enforcing our patent rights.
I do not recall having talked woth Mr. Swanson about
these suits, but. may have done so. His troubles were not
competition from Kleine, but competition from other licens¬
ees. One of the criticisms I lmd towards the exchanges in
Cliicago was that they kept constantly trying to take
business from each other, instead of trying to get business
from the independents, ns we called them. Mr. Swanson, at
one of the few talks I had with him, recommended his
friend, Mr. Mithin, to me, ns an attorney, hut according to
my best recollection, Mr. Mithin had nothing to do with
the suits that were brought against the theatres, although
he may linve done so.

Mr. Giiosvenoii: He says right here he did not
have anything to do with it.

The Witness: My best recollection is that Mr. Mithin
was employed to look up evidence against, a duping concern
in Chicago. This work wns quite limited.

pnny against these exhibitors for the purpose of intimidat-
Qy ing them? A. No, sir.

Q. And taking them away from Kleine? A. No, sir.
The suits were brought against infringers of our patents
for the purpose of enforcing the patents.

Q. That, of course, wns during the period of the
so-called warfare between the Edison and Biogrnph Camps?
A. In a period of very bitter and very active hostili¬
ties. Sir. Swanson, in his evidence, states tlmt it was my
purpose to find exhibitors who did not have too much
money, but lmd some resoruces and were responsible, but
I have no recollection of this. I do not recall that the char¬
acter of the infringers wns looked into in any way in con¬
nection with those suits.

Q. If any such conversation wns had, yon would be apt
to recollect, it, would you not? A. I think I would, al¬
though, of course, a lot of things were said that I can¬
not recall. I am quite sure that this conversation tlmt
Sir. Swanson speaks of did not take place.

Q. In connection with the suits brought by the Edison
Company against Kleine and his customers in ibos, Swanson
says, referring to the same pages of the record there, that lie
had several conversations with you about this. Do you recall
having more than one conversation with Swanson in Chicago?
A. No, sir, I do not.

Q. He further says tlmt he complained to you about
Kleine cutting prices of film to a ruinous basis. Do you
recall stating anything of tlmt kind? A. No, sir, I have
already stated tlmt I do not think that, Kleine did cut prices.
The trouble entirely wns in the unfair struggle between the
licensed exchanges in Chicago to get customers from each
other.

Q. He says tlmt he asked you if it was possible to elimi¬
nate tlmt ruinous competition, and you said that you did not
think that it was. Do you recall his asking yon tlmt ques¬
tion? Tlmt is at page 32fi. A. What ruinous competition
is he referring to? Between the licensed exchanges, or he-
*9 tween the licensed exchanges and the outsiders?

By Mr. Caldwell :

Q. Then were these suits brought by the Edison Com-

Mr. Gkosvhnor: T object to the witness asking
questions. He should read the testimony and decide
in his own mind.

1723

By Mr. Caldwell:

Q. Then rend again, Mr. D.ver, the few questions and
answers immediately preceding the Inst question on page 3-b.

. A. (witness reading) : Yes.

Q. Do you recall his asking any such question and join
giving any such answer? A. No, sir, I do not recall Mr.
Swanson specifically having asked me this question, but I do
recall that I was asked by a good many exchange men whether
anything could be done to eliminate the competition with the
so-called independents or infringers, and I stated that the
only thing that could be done was by suits on our patents.
That was my constant reply to all of these inquiries.

Q He says that lie suggested to yon a getting together
with Kleine, and offered to act as an intermediary, and yon
told him to go ahead. Did you ask him to act as intermediary
between the Edison. Company and its licensees and Kleine.
A. No, sir. Mr. Swanson is not the kind of a man that 1
would select as an intermediary, and I do not recall any
suggestion of bis that he should act as an intermediary, and
I knew at that time that the interest that was primarily
onnosed to us at that time was not Mr. Kleine, but was the

Biograpli Company, and if there was going to be any getting
together, it would have to be with the Biograpli Company.
Mr. Kleine’s approaching me was not at the suggestion of
Mr. Swanson, so far as I know. It was after the preliminary
meeting with Mr. Marvin and Mr. Kennedy, as I have already
testified. m

Q He further testifies there that he saw Kleine and told
you that Kleine said he was willing to drop all trouble and
‘work in harmony with the Edison licensees if it was possible
to do so, but that they laid refused to pay a royalty to the
Edison Company of one-half per cent., and his associates in
the Biograpli Company would require a division of that roj’-
alty before they would consider any peace negotiations, and
that when he reported this information back to yon, you said
that terminated the matter, as the Edison Company would
not agree to give any division of the royalties, as “the old
man needs the money," as he puts it. Did you make any
such statement to Mr. Swanson? A. No, sir, I have no recol¬
lection whatever of having discussed with Mr. Swanson the
question of the possible settlement/of the difficulties between
the Edison Company and the Biograpli Company, and I have

ere that he saw Kleine and told
willing to drop all trouble anil
lison licensees if it was possible
refused to pay a royalty to the

Frank L. Dyer, Direct Examination.

no recollection of the conversations to which you refer. My.
present recollection is that Mr. Kleine came to me of his own
initiative and asked me to meet him at the Bepublican Club,
in the Summer of 1808.

Q. Mr. Dyer, will yon turn to pages 1023 and 1024 of the
record, and read that portion of the testimony of the witness
Stryckmans, which you find there. A. (witness rending) :
Yes, sir, I have read this.

Q. Mr. Stryckmans says that Kleine told him that you
told Kleine that the reason why Kleine was restricted to the
Urban Eclipse and Gnumont films was that Gnumont had an
independent and non-fringing camera, and that they wished
to bring the Ganmont, Company into the combination in order
that these valuable patents would not fall into the hands of
the independents. Did you make any such statement as this
— - - ■ The reason the Gnumont films

my previous testimony, was that
of the output handled by Mr.

to Kleine? A. I did not. The reason the Gnumont films
were selected, as I said in my previous testimony, was that
they represented the best of the output handled by Mr.
Kleine. ,

Q. And Mr. Kleine wanted to continue to handle the
Ganmont films for this reason? A. Yes, sir. The Gnumont
patent had absolutely nothing to do witli it.

Q. Now, will you return to the record, and read pages
310 and 304? A. (witness reading) : Yes, sir.

Q. Have you read that? A. I have.

Q. Do you recall the fact that a committee representing
the Film Service Association called on you at your office,
No. 10 Fifth Avenue, about that time? A. Yus, sir.

Q. Do yon recall who the members of that committee
were? A. Mr. Waters, Mr. Clark, Mr. Howard, and Mr.
Aitken, I remember, and possibly also Mr. Swanson.

Q. Will you state, as near as you can recollect, just what
was said at that meeting by any member of the committee
and by yourself? A. I am not able to remember the con¬
versations or who did the talking. I think Mr. Marvin was
present, and also Mr. Scull, My recollection is that the im¬
portant thing that this committee wanted to have ns agree
to was to eliminate the fourteen-day cancellation clause,
which we refused to do. The committee also brought up, as
I recall, the question of the Patents Company collecting the
royalties directly from the theatres, because at that time, as
I recall, we lmd concluded to have the exchanges collect the
royalties, and they objected to tliis. And either at that time

run, Direct Exa

1724 Frank L. Dy

or when tlie suli-coininittee cnme to my office in Orange, I
agreed, after consulting with Hr. Marvin, to have the Patents Q

Company collect the royalties directly, And we did collect
the royalties directly, for some time.

Q. Do you know who constituted the sub-committee that
called on you at Orange the following day? A. Mr. Gilling¬
ham was one, and Mr. Licbcr the other.

Q. Did you tell Mr. Swanson or any other member of the
committee that the cancellation clause of the exchange li¬
cense would be enforced only in eases of violation of the
terms and conditions of the license? A. I did not.

Q. Did you state to Mr. Swanson or any other member
of the committee tlint the exchanges would have to collect
the royalties? A. My recollection is that that was the plan
that we had first in mind, to have the exchanges collect the
royalty, and wo agreed that the Patents Company would col¬
lect the royalties, or would try to. And my recollection is
that we did.

Q. Did you state to Mr. Swanson, or any other member
of the committee, that you, meaning the manufacturers,
had the situation pretty well in hand, and had competition
shut out, and those those that were fortunate enough to
secure licenses would undoubtedly make more money than
they ever did in their lives, that you had absolute control
of the business? A. I don’t recall having made that state¬
ment to any exchange man. I did think, however, that we
would be able to enforce the patents and confine the busi¬
ness to our licensees.

Q. Did you state to Mr. Swanson, or any other mem¬
ber of the committee, that so long as there were no viola¬
tions of the contract, that is to say, the exchange license
agreement, it would remain in existence during the life
of the patents held by the Motion Picture Patents Com¬
pany, ns long ns they had to run? A. No, sir.

Q. Will you turn, Mr. Dyer, to page 819 of the record,
and rend first, the last question on page 818, and the first
two questions and answers on pnge 819? A. (witness
reads): I have read this testimony. V-

Q. Mr. Fox testifies that he signed . the Edison sales
contract under the assurance that the provisions of Para¬
graph 2 ns to renting only to exhibitors handling licensed
films,' prohibiting the sale of films under any circnin-

Frank L. Dyer, Direct Examination. 1725

stances, would never be enforced. Do you know whether
any such assurance was given by the Edison Company to
Mr. Fox, or his licensed exchange, or any other licensed
exchange? A. I certainly never gave him any such as¬
surance, nor was nnyone authorised by the Edison Company
to give him that assurance. As a matter of fact, my present
recollection is that during the period of the Edison licenses
we were pretty generally successful in preventing infringe!
monts by the exhibition at our licensed theatres of in-
mngmg films. I think this particular provision was car¬
ried out, certainly by almost all of the theatres
„ ?«• tm'u t0 Page 1249 of the record, and road

that? A. (witness rends) : Yes, sir.

Q. Lodge there testifies that he attended some meetings
of the Edison licensees, at which the formation of the
Genera1 Film Company was discussed. Are you familiar
with the transactions that led up to the transfer of the
Me hes license to the George Melics Company of Chicago, of
which Lodge was Vice-President.? A. Yes, I think my
recollection is fairly clear on that point.

i i DV’?!‘ rcc‘l11 abo,lt tl,e time tlle Edison license
held by Melics was assigned to the George Melies Com- '
was some time before December, 1908. Pos-

8ibly October.

Q. Do you recall when the assignment of the license
became effective-what date? A. No, sir. I don’t remem¬
ber that, except that it was before the formation of the
Patents Company.

The Examiner: Mr. Cnldwell, would it he con¬
venient for you to hold a little longer at this ses-
s,°i , We began about twenty minutes late this
morning.

Mr Caldwell: Well, I should like to send to
the office for a record, and if convenient, I would
Jike to adjourn here.

„n.ri/rn""ri T"7
™JTSYV7?,!M p- *!’ ll"‘ '■

until 2.30 P. M. of the same day, at the same place.

172G Frank Tv. Dyer, Direct Examination.

New York City, November 13, 1913.

The hearings weer resinned pursuant to adjournment at
2:80 P. M., November 13, 1913, at Boom 159, Manhattan
Hotel, New York City.

The appearances were the same ns at the morning session.

Thereupon FBANK L. DYEB resumed the stand.

Mr. Caldwell : Piense rend the last question mid
answer.

The questions last put to the witness and the an¬
swers thereto were read as follows :

“Q. Do yon recall about the time the Edison license
held by Melies was assigned to the George Melies
Company? A. It was sometime before December,

1908. Possibly October.

“Q. Do you recall when the assignment of the li¬
cense became effective? What date? A. No, sir. I
don’t remember that, except that it was before the
formation of the Patents Company.”

The Witness: Add to that, “or rather before December,

1908.”

Direct examination continued by Mr. Caldwell:

Q. I show yon a copy of an agrceemnt executed by the
Edison Manufacturing Company, by Frank L. Dyer, Presi¬
dent — A. (interrupting) : Vice-President.

Q. Yes, Vice-President; by George Melies Company, exe¬
cuted by Gaston Melies, as President, and also by George
and Gaston Melies, individually, being “Schedule C” attached
to the bill of complaint in the case of the George Melies Com- :
pariy, complainant, against Motion Picture Patents Company,
and Edison Manufacturing Company, defendants, and George
Melies and Gaston Melies, Intcrvenors, in the Circuit Court
of the United States, District of New Jersey, this ngrecinent Q

being found on page 31 of the transcript, of the record in
that case in the United States Circuit Court of Appeals for
the Third Circuit, and ask you to look at the date of that
agreement, anil see if it refreshes your memory as to the
exact time when George Melies Company became a licensee

Frank: D. Dyer, Direct Examination. 1727

of the Edison Manufacturing Company? A. On November
% 2,1908.

Q. Docs that refresh your memory? A. Yes, sir.

Q. Then you are prepared to state that the George Melies
Company became a licensee on November 2nd, 1908? A.
Yes, sir.

Q. Did Mr. Dodge attend any meeting whatever of the
so-called Edison licensees between November 2nd, 1908, and
December 18th, 1908, at which the Motion Picture Patents
Company’s licenses were executed? A. He did not. I re¬
member very well that when he was present at the meeting
of December 18th, 190S, I had to introduce him to the other
gentlemen present.

Q. Did you hear any discussion at that meeting on De¬
cember 18tli, 1908, of tlie proposition to organise a film rental
company to be maintained and conducted by the licensed
manufacturers and importers? A. I did not. That meeting
was occupied altogether in considering the license agree¬
ments.

Q. Did Mr. Lodge attend any subsequent meeting of the
licensed producers and importers of the Motion Picture Pat¬
ents Company? A. Yes, sir. He was present at a meeting,
I think, in January of 1909, where several of the licensees
were present, and at that meeting we discussed the possibili¬
ties of adjusting the difficulties between the Carter-Dodge
interests on the one side, and the Melies interests on the
other, and that particular meeting was confined entirely to
the discussion of this particular question.

Q. On that occasion was there any discussion whatever
between you and Dodge, or between Dodge and anyone else
in your hearing, relative to the possibility of the formation
of an exchange to be conducted or controlled by the licensed
producers or importers? A. There was not. This question
was not discussed, or, at least, I knew of no discussions
until a long time afterwards, and shortly before the General
Film Company was formed.

- Q. I show you Petitioner’s Exhibit No. 24, at page 77 of

the record, the same being Exchange Bulletin No. 18, dated
December 4, 1909, signed by the Motion Picture Patents
Company, and ask you to look at that exhibit, and see if you
recall the circumstances which gave rise to the issuance of
that bulletin? A. Yes, sir,- 1 wrote this bulletin myself.

Q. And what were the occasions that gave rise to your

172S Frank L. Dyer, Direct Examination.

1 writing it? A. The fnct tlmt we had received complaints at

the office of the Patents Company from exchanges that they ©

had been led to believe that unless they acquired films of
certain licensed producers, those licensed producers would
start up exchanges in competition with them, and I think
that at the same time we considered complaints that had
been brought to the attention of the Patents Company from
theatres that if they did riot use the service of certain ex¬
changes, competing theatres would be started in opposition
to them. The first complaint I remember very well, but
whether the second complaint was acute at that time and

2 required notice in this particular bulletin, I am not able to
state, but that was the rumor that had been frequently
brought in to us, and it was felt important tlmt both of

i these mmors should be effectively stopped.

| Q. At the time yon wrote that bulletin originally was

there any thought in your mind that the licensed producers
and importers would ever organize exchanges of their own?

A. Absolutely none. I am able to Rtate without qnalifica-
I tion that the suggestion of the General Film Company, or any

; j similar organization, had not been made to me, and was not

: i g known to me at that date, that is, December 4, 1909.

; j Q. It is alleged in Subdivision 3 of the. petition that the

! defendants in this case determined to destroy competition

I ] between them, to monopolize commerce relating to the motion

: ; picture art, to exclude all others, and thereafter to carry

1 on said commerce according to the terms of the unlawful

j combination which they were to create. Did yon either indi-

|j vidnally, or any of the defendant corporations witli whicli

ijj you were connected at that time as an officer, or any officer

of any corporation with which you were connected, or to
your knowledge any of the other defendants, ever determine
| 4 or intend or purpose to do any such thing? A. No, sir.

| Q. The petition further charges that the defendants were :

S to organize the Motion Picture Patents Company for this

| purpose. By whom was the Motion Picture Patents Coin-

| pany organized? A. By the Edison and Biograph companies.

| Q. And was it for any such purpose as tlmt alleged in ^

i the petition? A. It was not.

f. Q. It is alleged in the same subdivision of the petition

£ that the Motion Picture Patents Company was to acquire all

| patents owned by the defendants, and all other patents re-

si luting to the motion picture art. Was there any such pur-

Frank L. Dyer, Direct Examination. 1729

•pose or intention on the part of the organizers of the Motion 1
Q Picture Patents Company? A. No, sir. We sought only to

acquire the patents that were being infringed and that re¬
sulted in patent suits.

Q. It is further alleged in the same subdivision of the
petition, page 10, tlmt the intent of the defendants in form¬
ing the Motion Picture Patents Company, and in entering
into the license agreements, wus to control, restrain and
monopolize all branches of commerce among the States of
the United States and with foreign nations, relating to the
'motion, picture art, and to exclude others therefrom. Did
you, either individually, or any of the companies represented 2
by yon, or to your knowledge, any of the other defendants,
have any such intention or purpose in the organization of the
Patents Company, or in entering into the license agreement?

A. We did not.

Q. Mr. Dyer, at the time yon reached an agreement with
tlie Biograph interests, ns to which you have already testified,
and prior to the formation of the Patents Company, did you
take into consideration the matter of the issuance of cross-
licenses by which each patent owner might license the other
interests under his patents? A. We considered and dis- g
cussed that possibility.

Q. You have already stated that it was attended with
difficulties, have you not?

Mr. Grosvenor : What was? I object to that.

Mr. Cardwell: That any system of cross licensing
was attended with difficulties?

The Witness: We did not Bee how the mntter could be
worked out feasibly by a system of cross licenses.

By Mr. CAi.nwnr.r, :

Q. State what difficulties you found of cross licensing.

Mr. Guosvenor: Objected to as wholly immaterial;
further, on the ground that the business difficulties
which defendants may have encountered in an effort
to arrive at a legitimate and legal cross licensing ar¬
rangement forms no excuse for not entering into such
an arrangement, or for forming an arrangement and

1730 Frank L. Dyer, Direct Examination.

1731

combination that violated tbo law, and therefore the
question as to why they didn’t do something else is
immaterial.

Mr. Caldwell : The Government, in its petition,
makes very material the organization of the Patents
Company, and alleges that it was formed for an un¬
lawful purpose. Tlie motives of these defendants in
organizing that company are therefore material to
the issues raised by the Government in its own peti¬
tion.

Mr. Giiosvenou : But you are asking him here about
why he didn’t do something else. That is the ground
of my objection.

Mr. Caldwell: For the simple reason that yon
have contended that the same result could have been
accomplished by a system of cross licenses, and that
1ms been your contention.

Mr. Grosvdnor: This is the first time that cross
licenses have ever been mentioned, to my recollection,

The Witness : At the time we discussed these matters with
the Biogrnph Company the situation was this: The Edison
Manufacturing Company owned patents on the only known
form of camera, or, at least, the camera that was universally
used at that time, and also a patent on the motion picture
film which we asserted and believed covered every motion
picture film made in or imported into this country. These
were the 'primary dominating patents.

proper way what u
patent on the film 1
valid, and no suits

not so, this so-called dominant
ving been at that time held in-
aving been brought thereon for
1 to the formation of the Edison
is testified to by Marvin, one of

License Association, as testified to by Marvin, one of
tile defendants in this suit.

Mr. Caldwell: I protest against counsel for the
petitioner interposing his argument upon the. record,
and testifying. lie is entitled to mnkc his objection

and state it on the record. If tlie objection is good,
the Court will probably sustain it. If it is bad, the
Court will disregard it. Now, you may proceed, Mr.
Dyer.

Mr. GnosvENon: I want to make my objection on
the record to this improper way of conducting this
equity proceeding by getting this witness to give a
lecture, instead of conducting it by proper questions
and answers, as counsel knows is the right way to
do it.

The Witness: The Biograph Company owned the Pross
and Latham pntents, which covered important and neces¬
sary details in the construction of the projecting machines.
The Armat Company owned the Armat-Jenkins patent, which
covered the shutters used in all projecting machines at that
time, and was therefore of vital importance to the legitimate
practice of the art. There were, therefore, three separate
and distinct licensors. Aside from these licensors there
were the following groups of licensees and infringers :

In the first place, there were the Edison licensees, who
were licensed under the Edison patents, but those licensees
were not licensed under the Biograph and Armat patents,
and therefore the Bale of film by them for use on infringing
projecting machines in the United States would have been
a- contributory infringement.

Mr. Grosvenor: All my objections I made above
apply to ail this line of testimony and examination.

Mr. Caldwell : I will agree that at the termina¬

tion of Sir. Dyer’s ansv
any objection that you
you will only refrain

r to this question you can put
ant to make on the record, if
om interrupting him during

Srr. GnbsvENOii: And I further object to the Inst
sentence for the reason that the statement is that such
>, and such would have been unlawful if they had done
such and such, which is manifestly improper testi¬
mony; it is not testimony to any fact. If you want
to change that to a- statement of fact, I will with¬
draw the laRt part of my objection.

1732 Frank L. Dyer, Direct Examination.

Mr. Grosvenou: All right.

The Witness : Therefore, to have licensed this group of
infringers would have necessitated a license from the Arinat
'and Biograph Companies under the Latham and Pross, and

Jenkins-Armnt patents. , „

The second group was tlie so-called Edison licensed cx-
clmnges, wlio were licensed to handle Aims under the Edison
patents, hut had not been licensed to handle (llnis under the :
Biograph and Aruiat patents. These exchanges, in handling,
films for use on infringing projecting machines, would also
he contributory infringers on the Latham, Pross, and Jen-
luns- Arinat patents, and therefore these exchanges would
similarly have had to he licensed by the Biograph Company
under the Latham and Pross patents, and by the Arinat
Company under the Arinat- Jenkins patent.

The third group were the so-called ■ licensed theatres,
which were licensed under the Edison patents, but which
in showing film on infringing projecting machines, were
infringing the patents of the Biograph and Armat com¬
panies, and, therefore, these theatres, in order to be free
from infringement, would similarly have had to be licensed
by the Biograph Company under the Latham and Pross
patents, and by the Armat Company under the Armat-Jen-
kina patent ‘ .

The fourth group were the manufacturers of projecting
machines, who were selling such machines in infringement
of the patents of the Biograpli and Armat companies, and
these concerns also would have had to be licensed by the
Biograph Company under the Latham and Pross patents,
and by the Armat Company under the Armnt.Tenkins pat¬
ent. nnd possibly, also, by the Edison Coinpnny under the
Edison film patent.-

The fifth group was the Biograpli Company, and its
licensees, producers and importers of infringing films. While
the constituents of this group would be licensed under the
Latham nnd Pross patents, they would then, in carrying on
their operations, infringe the Edison patents, and, there¬
fore, would have had to be. licensed by the Edison Com¬
pany under the Edison patents, and in supplying film for
use on infringing projecting machines, they would have

Frank L. Dyer, Direct Examination. 1733

had to be licensed by the Armat Company under that
patent.

The sixth group were the exchanges handling the film of
the Biograpli Company, and its associates, which group,
although licensed under the Latham nnd Pross patents,
would be directly infringing the Edison film patent, and
would, therefore, have had to be licensed by the Edison
Company under that patent, nnd in disposing of film to
theatres for use on projecting machines infringing the
patent of the Armat Company, and would have had- to be
licensed by the Armat Company under the Armat-Jenkins
patent.

And finally, the seventh group, including the so-called
independent theatres, who were receiving film of the Bio¬
graph Company and its associates, and the constituents of
this group, although licensed under the Latham nnd Pross
patents, would directly infringe the Edison film patent,
so that they would also have had to he licensed by the Edi¬
son Company under the film patent, nnd they would also
directly infringe the Armat-Jenkins patent, and so they
would have had to he licensed by the Armat Company, un¬
der that patent.

Now, in discussing this question, we realised that the
granting of these licenses would necessarily involve many
thousand separate licenses from the various groups of li¬
censors to the various groups of infringing manufacturers,
exchanges, nnd theatres, so that, the difficulty of providing
such licenses was very great, nnd the difficulty in enforc¬
ing, such a very complicated system of licensing would he
extremely difficult; hut the insuperable difficulty which
confronted ns was the fact that, if the three licensors acted
independently, and without co-operation, that, it would be
impossible, to get any order out. of the chaos which the situ¬
ation presented. Each licensor considered its patents as
valuable, if not more so, than the other licensor, and each
wanted to get just as much in the -way of royalties as
could be gotten. We felt that to leave these three licensors
to independently negotiate licenses with these conflicting in¬
fringing groups would be an impossibility, and that there
would have to be some understanding and co-operation among
.the three licensors, by which there could be a fair division of
the royalties. Unless there was some co-operation, as I have
stated, it, seemed to us, and I still feel, that the solution

1734 Frank L. Dyer, Direct Examination.

John Hardin, Direct Examination.

would lmve been absolutely impossible. If there could be
co-operation among the three groups of licensors on the
subject of collecting and dividing the royalties, we felt
that that co-operation could be best secured by means of
a company that would act as a single licensor, that would
provide for the granting of all the licenses required, that
would provide for the collection of all the royalties, and
that would provide for the division of these royalties among
the three licensors in the proportions they had agreed
upon, was fair and equitable under all the circumstances
of the case. While, therefore, the system of cross licensing
ns discussed by us, might have been theoretically possible,

' it seemed to us to involve practically a reasonable impossi¬
bility, and, therefore, the suggestion of a single licensor
to take tlie patents seemed to us to be an acceptable and
reasonable solution of our difficulties.

By Mr. Caldwell :

■ Q. Tlie petition, in Paragraph 5, alleges that with the
same unlawful purpose, each of the ten manufacturers
theretofore referred to, entered into the license agreement
with the Patents Company on December 18, 1908. Did you,
‘or any of the companies represented by you, or any of the
other defendants, to your knowledge, have any such pur¬
pose or pin-poses as those alleged in the petition, in enter¬
ing into this license agreement? A. No, sir, we did not.

Q. The same allegation of unlawful purpose and in¬
tent is contained in Subdivision 8 with respect to the-
execution of license agreements, with the manufacturers of
exhibiting machines. Were these agreements, or any of
them, made with the intent or purpose alleged in the peti-

Q. In Subdivision 9, on page 27, tlie petition alleges
that the defendants set out to monopolize the business at
all the rental agencies, or exchanges, in the United States,
their purpose being to drive out of business all persons
so engaged, and to absorb to themselves the profits there¬
tofore made therein, and that this unlawful end they ac- •
complislied by means of the General Film Company. Are
these allegations of the petition true? A. , No.

■ Q. Was the General Film Company organized for any
such purpose? A. It was not.

. Q. In Subdivision 11, page 34, of the petition, it is al¬
leged that with tlie same unlawful purpose, each of the
ten Patents Company licensees executed an agreement with
tlie General Film Company, to supply the latter with film.
Were these agreements executed for the purpose alleged in
the petition? A. No, sir.

Mr. Cardwell
Mr. GnosvENOn
tirely?

Mr. Caldwell
When would you 1
Mr. Grosvbnoh
day, if you like.
Mr. Caldwell

a through with him entirely.

3 cross examine him?

dll cross examine him Mon-

Mr. Caldwell: Well, without establishing a pre¬
cedent which seems to he a departure from our usual
custom in these hearings, I will consent that you
may defer or postpone your cross examination of Mr.
Dyer until Monday.

Mr. GnosvENOn: I think that lias been the regu¬
lar practice. You have not cross examined any¬
body —

Mr. Caldwell: (interrupting) : You held us
pretty strictly to the rule which you yourself laid
down, I believe, at the outset of tlie hearings, that
the cross examination of a witness should be com¬
menced on the day following his direct examination.

Mr. Grosvenor: I will cross examine you, Mr.
D|yer, tomorrow, if you will be here, at 10 :30 o’clock.

The Examiner: You are excused until that time,
if you care to go, Mr. Dyer. Who is tlie next wit-

'll

Evidence.

1751

IN TIIB

DISTRICT COURT OP THE UNITED STATES
For tub Eastern District of Pennsylvania.

New York City, November 14, 1013.

The hearings were resumed pursuant to adjournment at
10:30 A. M., November 14, 1913, nt. Room 159, Manhattan
Hotel, New York City.

Present on behalf of the Petitioner, Hon. Edwin
P. Grosvenor, Special Assistant, to the Attor¬
ney General.

J. R. Darling, Esq., Special Agent.

Present also, Messrs. Charles P. Kingsley, George
R. Willis and Fred R. Williams, appearing
for Motion Picture Patents Company, Bio¬
graph Company, Jeremiah J. Kennedy, Harry
N. Marvin and Annat Moving Picture Com¬
pany.

Mr. J. H. Caldwell, appearing for William Pelzer,
General Film Company, Thomas A. Edison,
Inc., ICalem Company, Inc., Pathe Freres,
Frank L. Dyer, Samuel Long and J. A. Berst.

Mr. Henry Melville, attorney for George Kleino,
Essnnny Film Manufacturing Company, Selig
Polyscope, George K. Spoor and W. N. Selig.

Mr. James J. Allen, appearing for Vitngraph
Company of America, and: Albert. E. Smith.

Thereupon, FRANK L; DYER resumed the stand.

Cross examination by Mr. GaosvBNon:

Q. Mr. Dyer, you have stated on direct examination that
you were geueral counsel for Mr. Edison from April, 1903,
to July, 1908; is that correct? A. Yes, sir.

Q. Are you a member of the Bar of New York State? A.
No, sir. 1 am a member of the Bar of the District of Colum¬
bia.

Q. You are not licensed to practice law in the State of
New York? A. No, sir, not before the State Courts.

Q. You were general counsel for the Edison Company
during this period of warfare in the early part of 1908 be¬
tween the Edison Manufacturing Company and the Biograph
Company? A. Yes, sir, although I became the Vice-Presi¬
dent of the Edison Manufacturing Company in July, 1908,
and thereafter devoted myself entirely to commercial matters.

Q. You testified at the beginning of your examination
rather generally ns to the litigation prevailing in the years
prior to the formation of the Patents Company. Have you
any memoranda, or have you refreshed your recollection by
looking up the dates as to these various suits, so as to be able
to testify more specifically in regard thereto? A. No, sir,
but I remember tile circumstances fairly well, but not the

Q. The first suit against the Biograpli Company brought
by the Edison Company on patent No. 669,168, which was the
patent embracing both the camera and the film patents, was
decided in the; Circuit Court of Appeals of the Second Cir¬
cuit against tile Edison Company in March, 1902, was it not?
A. I think it was’ about that date.

Q. And subsequently you obtained, and I mean by “you”
the Edison Company, obtained reissues, one reissue on the
camera claims, and another reissue, which was No. 12,038,
and, subsequently, No. 12,192, on the film claim? A. Yes,

Q. In that first decision of Judge Wallace, in 1902, you
recall that the decision was against Edison’s claims on the
film, is that correct? A. The decision: was to the effect that
tlie claims were too broad, and that the claims under the
original patent were broader than the Edison invention.

Q. Can you point to any decision in the six years that

o»

elapsed, or the six. and n half years that elapsed, , between
November, 1902, and the formation of the. Patents Company
in December, 1908, in which the film. patent was sustained?
A. No, sir, I don’t think there was any decision.

Q. Yon have testified as to the litigation, between the
Biograph Company and the Edison, Compnny after the deci¬
sion in 1902, in which the film claim of Edison was cast uside
by the Court. Did you bring any suit, any subsequent suit,
against the Biograph Company until the Spring of -1908,
when the Biograph ■ Company had refused to: join with 'the
Edison licensees, and then you commenced suit against them?
A. Yes, sir, my recollection is that— t •

Mr. Kingsley (interrupting) : I object to the form
of the question to the extent of the last clause, “and
then began suit against the Biograph' Company.” .

Mr. GnosvHNOit: I ! will chnnge the form of , the
question.

Mr. Kingsley; The inference being that on the
refusal of the Biograph Company to come in and be¬
come an Edison licensee the suit was brought. <

Mr. Grosvenok: I will chnnge the question.

By Mr. GnosvENou:

Q. From March, 1902, when Judge Wallace handed down
that opinion in the Circuit Court of Ajipeals, in this Circuit,
up to February, 1908, had you brought any suit on your film
patent reissue, or on your film claims, against the Biograpli
Company? A. Yes, sir, we had.

Q. What was the date of such a suit? A. My impression
is that two suits were simultaneously brought against' the
Biograpli Company, one on. the camera reissue No. 12,037,
and the other on the film reissue No. 12,038, and that it was
because’ of ., the knowledge that the Biograph Company would
interpose the defense tlmt the reissue No. 12,038 had actually
broadened the scope of the claims, instead of narrowing them,
thnt the second reissue No. 12,192 was granted.

Q. No, 12,038 was the first reissue of the film ’patent,
after the opinion, of Judge Wallace? A. Yes) sir. : ;

Q. Is it not a fact that you brought suit on thnt re¬
issue No. 12,038, November, 1902, and that the suit, was
discontinued on January 12, 1904? A. I think that is so.

1751

Frank L. Dvkr, Cross Examination.

Q. And it was about that time that the reissue No.
12,038 was abandoned, and you got another reissue on the
film claims, namely, No. 12,192? A. Yes, sir, I think the
second film reissue was granted in 1901.

Q. Mr. Dyer, had you brought any suit against the
Biograph Company on the 111m patent reissue No. 12,192,
from the time of its issue, dated January 12, 1904, up
to February, 1904, when these Edison licenses were is¬
sued? A. I was under the impression that we lmd brought
suit against the Biograph Company on the reissne No.
12,192, some time before February, 1908, but- if that is
the date when the suit was brought then I know of no
such other suit brought against the Biograpb Company
between those dates.

Q. I am not asking you ns to your impressions, Mr.
Dyer. Can you testify whether or not the Edison Company
brought any suit against the Biograph Company before the
formation of the so-called Edison License Association? A.,
I was of the belief that the suit against the Biograpli Com¬
pany had been brought earlier than you have stated, but
the only suit on this patent tlint was brought against the
Biograpb Company was the one that was pending in the
Summer of 1908, and, therefore, if that is the suit that was
filed in February, 1908, then I do not know of any suits
that were brought between January, 1904, and Febrnnry,
1908, on that point

Q. You were the general counsel for the Edison Com¬
pany at that , time? A. Yes, sir, but these patent suits,
you 'understand, ; were handled by separate patent counsel.
Mr. Bull was in charge of these suits, and he knew more
about them than I did.

answer, Mr. Dyer, frankly, yes (

whether the Edison Company- had or had not brought snit •
against the Biograpb Company on reissue No. 12,192, before
the Biograph Company refused to join in with the Edison
licensees? A. Not any more fully than I have. X have
stated that if that is the date when that suit was brought
then I know of no suit. In other words, I ain quite con¬
fident that two suits were not brought.

Q. You did not, then, on your direct examination by
your counsel, intend to give the impression that yon were
in litigation with the Biograph Company on the film pat¬
ent prior to March, 1908? A. No, sir.

Q. Now, the Biograph Company was your principal
. competitor, was it not? A. In the early days they were,
but later on other competitors came in, principally Pathe.

Q. But the Biograpb Company was one of your princi¬
pal competitors in the year 1904, and to the year 1908? A.
Yes, sir.

Q. During that time the Biograph Company was manu¬
facturing and selling positive motion picture films, was
it not? A. Yes, sir.

Q. And during that period of four years you brought
no suit against that company, upon that film reissue No.
12,192, did you? A. I don’t think we did, no, sir.

Q. It is a fact that you didn’t bring any suit dnring
that period of four years against the Biograpb Company
on reissue No. 12,192? You know that? A. Mr. Gros-
venor, 1 am not trying to evade your question. The only
doubt I have is as to the date when the film suit was
brought.

Q. Don’t you know, Mr. Dyer, that you did not sue
the Biograph Company on reissue No. 12,192, until after
they declined to join in with the other Edison licensees?
Now, don’t you know that that suit was subsequent to
their refusal? A. I don’t know that I don’t remember the
'date, but ir that is the date, then it is a fnct, because they
had refused to accept a license by the first of February.

Q. You testified os to litigation on the Latham patent.
Isn’t it true, Mr. Dyer, that prior to the formation of the
Patents Company, and the merging of the different pat¬
ents in that holding company, you, as general counsel for
the Edison Company, had scoffed at the claim made under
the Latliam patent? A. I had sneered at it.

, Q. When was the Lntlmm patent issued? A. I think
in 1902. .

Q.: When? A. In 1902, I think.

Q. Do you know Mr.. H. N. Marvin? A. Very well,

Q. During this period from 1904 to 1908, lie had been
one of the principal officers of the Biograpli Company? Is
. that not the fact? A. Yes, Bir.

Q. And isn’t it.u fact, that during that period, he had
scoffed lit your pretense,, or any pretensions under the
film patent? A. I. think so. That was a customary tiling
in business circles, to depreciate the patents of your, com¬
petitors, and glorify the patents of your own.

173(5

Fbani

j. Dyer, Choss Examination';

Frank L. Dyer, Cross Examination,

1757

Q. The Biograph Company did not buy the Latham pnt-
ent until after the formation of the Edison licensees, did
it? A. I don’t think they did, but I am not positive.

Q. In any event, no suit was brought against the Edison
Company on the Latham patent, until after the formation
of the Edison licensees? A. No, sir.

Q. And the Edison Company for many years had used
the so-called loop on its projecting machines, and cameras,
had it? A. We had been infringing this patent, yes, sir.

Q. I say you had been using the loop on your cameras
and projecting machines, for many yenrs? A. That was the
purport of my answer, yes, sir.

Q. And no suit had been brought against you, had it?
A. No, sir.

Q. Mr. Dyer, do you recall making a statement in regard
to the Latham patent to the representatives of the Show
World, which was subsequently published in the Show
World of April 4, 1908, being printed in the Show World
of April 4, 1908, at page 11? It is also printed in Dyer’s
testimony in another suit, numbered 5-167, Vol. 2, page
170. I think that is the suit under the Latham patent.
I have not either of those with me.

Mr. Caldwell: I think that is in our record.
Can yon give us the page of the record?

By Mr. GnosvENOR :

Q. Please look at that statement, and see whether that
refreshes your recollection as to your making such a state¬
ment to the representatives of the Show World about the
time indicated? _

Mr. GnosvENOR: Where does it appear in the rec¬
ord, Mr. Scull?

Mr. Scull: I will find it in a moment.

Mr. GnosvENOR: I thought I had put it in.

Mr. Kingsley : I want him to testify the page
and volume he has there, and what suit it is in.

Mr. Grosvenor: I will do that in a moment.

The Witness : Please read the question.

The question was read as follows:

“Mr. Dyer, do you recall making a statement in
regard to the Latlinm patent to the representatives of
the Show World, which was subsequently published
in the Show World of April 4, 1908, being printed
in the Show World of April 4, 1908, at page 11? It
is also printed in Dyer’s testimony in another suit,
numbered 5-1S7, Volume 2, page 170. I think that
is tlie suit under the Latham patent. I have not
either of those with me.”

Mr. Caldwell: What other suit, may I ask?

Mr. Grosvenor: In the suit in the Circuit Court
of Appeals, or the Circuit Court here; it is in
Volume 2 of one of those suits Kenyon & Kenyon
brought against you. This suit is the record in the
Greater New York Film Bental Company.

By Mr. Grosvenor:

Q. Just refresh your recollection by this (passing wit¬
ness some papers) and I will ask you the question.

Mr. Caldwell: For the purpose of the record,
the suit of the Greater New York Filin Rental Com¬
pany agninst the Biograpli Company, and the General
Film Company?

Mr. Grosvenor : I will bIiow yon it in a moment,
and then you can make such statement ns you wish.

The Witness: (after examining paper): Yes, I recnll
this article, and of having made those general statements.

Mr. Kingsley: In this record it is Petitioner’s
Exhibit No. 173, at page 980, of the record, Vol. 2.

Q. Now, witness, I show you the same article again, m.-
ing Petitioner’s Exhibit No. 173 in this case, printed in the
record at page 980. Please look at that, and see if that is a
statement made by you? A. Yes. I have already stated
that I recalled this article, and remember having made the
statement, or those general statements at the time.

1758

Frank L. Dyer, Cross Examination.

1759

Q. In this interview you characterized the Latham pat¬
ent as a “joke” in the business, did you not? A. I did at ' Q
that time, yes, sir.

Q. You say in this article also: “I have been familiar
with this patent ever since its issue.” Is that a true state¬
ment? A. Superficially considered, yes, sir.

Q. You also stated : “I at one time looked into the Lath¬
am patent in the hope that I might be able to persuade my¬
self that it possessed value, but I could not see anything in s
it.” Did you make statements to that same effect about
that time? A. At that time I did, yes, sir.

Q. You say: “According to the people who are now af¬
firming its validity, it has been infringed by everyone since
August 26tli, 1902, when it was issued.” Who were the
people that were affirming its validity at the time you mode
this statement in April, 1908? A. I think the Biograph
Company were doing that.

Q. Who had acquired the patent about that time? A.

I don’t remember when they acquired the patent, but I
think they acquired it shortly before that time.

Q. That is, shortly before the date of that interview?

A. Yes, sir. '

Q. Had the patent been infringed by everyone since its
issue in 1902? A. So far as I know, it had. That is, when
I say “everyone,” you understand, I mean people in the
moving picture business.

Q. You refer there in your statement, also, to trouble
Latham had by reason of an interference with Thomas Ar-
mat, and you say that “The Court of Appeals of the Dis¬
trict of Columbia decided in that interference that Armnt
and not Latham was the first inventor. As a result of this
controversy all that Latham was able to obtain from the
Patent Office was a very limited patent.” Did yon make
that statement about that time? A. That was the cause of
the error in my statement. I was under the belief that Ar-
mat was the first inventor, but subsequently found that
Latham antedated Armat. _

Q. And you made this remarknble discovery about the SB

time you and the Biograph Company came together, and
you began to try to enforce the Lathnm patent? A. No,

Q. 'When did you make that discovery? A. I think Mr:

Marvin told me I was wrong in my belief as to the facts as
f) to the question of the priority of invention between Armat

and Lathnm.

Q. Did Mr. Marvin call to your attention any decision
of the Court upholding the Latham patent? A. Not at that
time, but later Judge Coxe, in this Circuit, found that Mr.
Lathnm was the primary inventor.

Q. Are you frank in your last answer, Mr. Witness? ,A.
I try to be always frank.

Q. Was that, opinion of Judge Coxe a dissenting opin¬
ion? A. It was.

Q. It was not the opinion of the Court, was it? A. No,
sir.

Q. Then, when you say that Judge Coxe found such and
such, you mean to say he filed a dissenting opinion, dis¬
agreeing with the majority of the Court? A. I mean Judge
Coxe, in investigating the question of priority between Ar¬
mat and Latham, decided that Latham antedated Armat.
The decision of the Court was purely on the question of the
scope of the patent but not ns to its validity.

Q. And the decision of the Court was against Judge
Coxe, the decision of the majority of the Court? A. Only
on the question of the scope of the patent. The Court did
not consider the question of validity hut assumed the pat¬
ent to be valid, and held it was not infringed by the cam¬
era. In other words, that the claims were not brond enough
to include a camera.

Q. In other words, the Court held that the Latham pat¬
ent did not apply to a camera, was that it? A. Yes, sir,
that was it.

Q. Now, witness, you testified generally yesterday in re¬
gard to the purposes in forming .the General Film Com¬
pany. ■ Are you a' director of the General Film Company?
A. Yes,, sir.

Q. Have you been one of the directors since its forma¬
tion? A. Since the first meeting of the stockholders.

Q. And you represented the Edison Company in your
D connection with the General Film Company? A. Up to

about December, 1912, I did, yes, sir.

Q. Then in the negotiations or conferences which resulted
in the formation of the General Film Company you partici¬
pated as a representative of the Edison interests? A. Yes,
sir.

1700

Frank L. Dyer, Cross Examination.

Frank L. Dyer, Cnoss Examination.

1701

Q. I ■want to direct your attention to the following testi-
money in the record, first, at page 257, Petitioner’s Exhibit Q

No. 78, being a letter addressed by J. J. Kennedy to William
Pelzer, Secretary, dated January 23, 1912, in which this
statement is made :

“Dear Sir : Sometime before the General Film Compnny
was organized, an estimate of the value of the business of
exchanges leasing liceused motion pictures was made by men
familiar with the manufacture of motion pictures, and also
with the business of exchanges.

“According to this estimate, the value of said busjncss
was §3,408,847.” And I will direct yonr attention to Peti¬
tioner’s Exhibit No. 80, Record, page 272, being the minutes
of a regular meeting of the Board of Directors of the General
Film Company, held at 10 Fifth Avenue, New York City, Oc¬
tober lltli, 1910, at 4 : 30 P. M. “Present, Messrs. Kennedy,

Berst, Dyer, Kleino, Long, Lubin, Selig, Smith, Spoor, and
Pelzer, Secretary.

“Mr. Kennedy reported on behalf of the Executive Com¬
mittee that the Company had purchased 39 exchanges, and
made the following detailed report of conditions as of Octo¬
ber 10, 1910:

“Number of Licensed Exchanges in entire country, in¬
cluding Yale Company of St. Louis, 59.

“Owned by General Film Company, 39.

“Not owned by General Film Company, 20.

“Percentage of Exchanges owned by General Film Co.,

06%.

“Percentage of business of entire country controlled by
General Film Company, based on reels, 71%.

“Payments authorized for exchanges owned October 10th,

Stock §591,400, Cash §1,483,200.

“Prices— actual— including interest amounting to §90,500,

Stock §535,900, cash §1,369,600; Saving §55,500 stock, and '

§113,600 cash.

“Total payments authorized for all exchanges in entire
country, Stock §980,800, Cash §2,480,000.”

Now, Mr. Dyer, when was that authority given by the Cs

Directors of the General Film Company naming this figure,
which in stock and cash aggregates §3,468,800, for all ex- 1 -t
changes in the entire country? A. I have no recollection of
authority ever having been given by the Directors.

.Q. How did that figure and that statement get into tlio

minutes of the Directors as a statement of the fact, namely,
that authority had been granted, if authority had not been
granted? A. I would like to say, in the first place, that the
letter referred to in the previous question from Mr. Ken¬
nedy to Mr. Pelzer, is a letter I knew nothing of until my
attention was directed to the fact that it had been introduced
in this case; and I know nothing about any estimate having
been made prior to the organization of the General Film
Company, as Mr. Kennedy states..

Q. Mr. Kennedy was the President of the General Film
Company at the time that letter was written, was he?

Mr. Kingsi.by : Look at page 252.

The Witness : Yes, he was the President.

By Mr. Grosvenor :

Q. And who was Mr. Pelzer, to whom the letter was ad¬
dressed? A. Secretary of the company at that time.

Q. Mr. Kennedy had been President of the company from
the date of the formation of the company up to and after the
date of that letter? A. Yes, sir.

Q. And Mr. Kennedy was the man who, on behalf of the
General Film Company, conducted the negotiations resulting
in the purchase of the several exchanges? A. X think he lmd
largely to do with that particular w’ork. That is, he had
more to do with it than any other officer of the General Film
Company.

■ Q. Now, going back to my question that you have not
answered; A. Please read the question.

The question was read as follows :

“How did that figure, and that statement, get into
the minutes of the Directors as a statement of the
fact, namely, that authority had been granted, if au-
thority had not been granted?”

A. (continuing) : I can only state that I recall Mr; Ken¬
nedy having rend this statement, or having stated the effect
of the statement at the meeting in question, but I do not
recall any meeting of the Board where any authority along
the lines suggested in his report was given.

17G2 Frank L. Dyer, Cross Examination:

1 Q. Isn’t tlie fact that the figure he names as having been

authorized to he paid for the branches of all the exchanges is q

exactly the same as the figure he names in his letter as being

the estimate made before the General Film Company was
organized as to the value of all exchanges?

Mr. KiNosr.BY ; I suggest that the -witness be given
a piece of paper so that ho can add up those columns.

Mr. Grosvenor: First look at page 272 of the
record—

2 The Witness : I have that in mind.

By Mr. Grosvenor:'

Q. What is the figure Mr. Kennedy says was the original
estimate on January 23rd, 1912? A. According to the esti¬
mate the value of the business was $3,468,847.

Q. What is the figure that he names; in the minutes of
October 11th, 1910? A. Adding the amount of stock to the
amount of cash the result is, $3,408,800.

Q. Then there is a difference of $47 only? A. Yes, sir, in

8 those two statements.

Mr. Kingsley: What was that figure; was it
$3,268,000?

The Witness: $3,468,800.

Q. I call your attention to Petitioner’s Exhibit 83, page
278 of the record, being the minutes of a regular meeting of
the Directors of the General Film Company, held at 80 Fifth
Avenue, New York. City, January 16th, 1911, at 4 P. M.

4 Present, Messrs. Kennedy, Berst, Dyer, Kleine, Long, Lubin,

Selig, Spoor and Pelzer, Secretary. Also Messrs. Blackton,

Marvin, Paul Melies and Bock, and so forth. Then it says
that Mr. Kennedy made the following report of the business
obligations, and so forth. Now, here are the words : “Cash _

to b^ paid in instalments, $ 1,600,300.00 ; interest, $100,863.00 ; aJ

seven per cent, stock, $646,200.00.” Then, “Original estimate
of exchanges not bought, but still licensed, $351,300.00, and
seven per cent, stock, $140,100.00.” / Did you ever see this
original estimate, Mr. Dyer? A. No, sir; I saw no estimate

Frank L. Dyer, Cross Examination 1763

at all. The only statement I recall in connection with this 1
ft) matter is the minutes of the former meeting that we were

talking about, and although I am indicated as President at
that meeting you just read, and undoubtedly was President,

I do not recall the figures given at that meeting.

Q. As a matter of fact, Mr. Dyer, whether or not the
purpose existed prior to the formation of the General Film
Company by the organizers of the General Film Company
to acquire all the licensed exchanges, the fact is that eighteen
mouths or thereabouts after the formation of the General
Film Company, all those licensed exchanges lmd passed out
• ■ of existence either by reason of the purchase by the General 3

Film Company, or the cancellation of their licenses, except
the one licensed exchange, the Greater New York Film Bcn-
tal Company? A. I do not recall when the last exchange
was taken over, but it is a fact that for some time, and prob¬
ably from some time as far back ub 1911, the exchanges
which formerly were in business, or rather, were in business
at the time the General Film Company was organized, sold
their films to the General Film Company, which thereafter
handled them, but I do not think the identity of those ex¬
changes ended. I think that some of them are still in ex- 3
istence now without doing any business; in other words,
the exchanges were not terminated, hut tlie supply of film
was bought, because I know — my recollection is very clear
that the payments that we are mnking now' on the goods
bought at that time, some of the payments, are made to
former exchange names.

Q. Do you consider that last answer of yours a frank
and truthful statement? A. My statements are always
truthful, Mr. Grosvenor, and I try to be ns frank as I can.

I am trying to answer your questions, without reservation
at nil, and I think that your question implied that the ex- 4.
changes had actually censed and terminated, and I wanted
to make it perfectly clear that I did not think that was so,
although I am willing to admit that for all practical pur¬
poses, that might be so.

O. Q. What might be so? A. That for all practical pur¬

poses, the exchanges had terminated.

Q. Let us get at it in another way, Mr. Dyer. After the
Patents Company was organized, it licensed approximately
one hundred exchanges to handle the so-called licensed film,
isn’t that right? A. Yes, sir.’

1704 Frank L. Dyer, Cross Examination.

Q. A year or two later tlie General Film Company was
organized, isn’t that right? A. .Yes, sir. (g)

Q. Eighteen months after the General Film Company
was organized, was there one of those one hundred exchanges
in the United States handling licensed film, except the Greater
New York Film Rental Company? A. I am not certain
about the eighteen months, hut after sometime in 1911 that
is quite true.

Q. Is there one of those hundred-odd exchanges that is
today handling the so-called licensed film, other than the
Greater New York Film Rental Company? A. No, sir.

Q. Now, then, you say that the purpose did not exist in
the organizers of the General Film Company to acquire the
business of those 100 exchanges. I understood you to so
testify yesterday or the day before on direct examination
by your counsel. A. The purpose did not exist in iny mind,
and so far as I could' tell from conferences with my associates,

I do not think it existed in their minds.

Q. Well, please state when the purpose was born which
has resulted in the acquisition of all of those companies ex¬
cept the Greater New York Film Rental Company.

Mr. KiNGSr.Br: I object to the question ns in¬
competent, also object to the form of it, as embodying
a conclusion which the witness is asked to endorse.

Mr. Caldwell : And I further object to it on the
ground that it assumes the existence of a fact which
lias not been proven.

The Witness: Will you read the question?

The Examiner repeats the question as follows : . .

“Q. Well, please state when the purpose was bom
which has resulted in the acquisition of all of those
companies except the Greater New York Film Rental
Company.”

The Witness : I am not able to state that there was ever
such a purpose born. My belief is that the exchanges came
to us to sell out.

Frank L. Dyer, Cross Examination. 1765
By Mr. Gbosvbnor:

% Q- Then you got the exchanges without having the pur¬

pose to get them, is that it?

Mr. Kingsley: I object to the question as being
an improper characterization of the preceding an¬
swers of the witness.

The Witness : Will you read the question, plense?

The Examiner repeats the question as follows :

“Q. Then you got the exchanges without having
the purpose to get them, is that it?”

The Witness: It was not our purpose to get them
when the General Film Company was formed, and I think
the acquisition of the exchanges was a development which
came from an initiative on the part of the exchanges, and
not on our part.

By Mr. Grosvbnor:

Q. Going back to the Film Service Association, Mr.
Dyer, and to the licenses issued by the Edison Company
to the rental exchanges, the fact is, is it not, that those
rental exchange licenses are based entirely on reissue No.
12,192, that is, the film reissue patent? A. That is my
recollection, but the license states. I would like to re¬
fresh my recollection on that before I answer definitely
(referring to papers). Having refreshed my recollection
by looking at Petitioner’s Exhibit 91, that is correct.

Q. And it is true, is it not, that the rental exchange
license agreement issued by the Patents Company to rental
exchanges in the beginning of 1909, was also based ex¬
clusively on reissue letters patent No. 12,192, namely, the
film patent? A. (referring to Petitioner’s Exhibit No. 8) :

^ Will you rend the question plense?

The Examiner repeats the question as follows:

-. “Q- And it is true, is it not, that the rental
exchange license agreement issued by the Patents
Company to rental exchanges in the beginning of

1700 Frank L. Dyer, Cross Examination.

1909. was also based exclusively on reissue letters
patent No. 12,192, namely, the film patent?

The Witness: No, sir, it is not true.

By Mr. Gbosvenor:

Q. Will you please name any patent other than No.
12,192 which the rental exchange is licensed to use in that
license, Petitioner’s Exhibit No. 8, that is to say, what
license right is granted under the terras of that exchange
agreement? A. I apologize, Mr. Grosvenor. That is cor-

Mr. Kingsley (interrupting) : I object to the
counsel for the Government using the terms inter¬
changeably there in his question. The first question
asked of the witness is whether the license is based
on patent No. 12,192. Then he is asked if the license
mentions any other patent, or grants any right under
it the two questions not being synonymous, although
being used by the attorney for the Government as
interchangeable in interrogating the witness, and in¬
tended to confuse and mislead.

Mr. Caldwell : I further object to the question,
on the ground that it calls for the construction of
a Written instrument which is already in evidence,
and, therefore, calls for purely a legal conclusion.

Mr. Guosvenor : The witness did not seem con¬
fused, although his counsel appears so. Now, go
back to that answer, please, Mr. Examiner, where
the witness apologized, and read the question ana

follows :

“Q. Will you please name any patent other than
No. 12,192, which the rental exchange is licensed to
use in that license, Petitioner’s Exhibit No. 8, that
is to say, what license right is granted under the
terms of that exchange agreement? A. I apologize.

Frank L. Dyer, Cross Examination; 170 i

The Witness: Let me go ahead now. The exchange
license also refers to other patents owned by the Patents
Company, and there would, therefore, be a question as
to whether any rights by implication, were included under
those patents.

By Mr. Grosvenor:

Q. This granting clause in this exchange agreement says,
“The licensor hereby grants to the licensee for the term,
and subject to the conditions expressed in the conditions
of the license hereinafter set forth, the license under the
said reissued letters patent No. 12,192, to lease licensed mo¬
tion pictures from the licensed manufacturers and im¬
porters, and to sublease said licensed motion pictures, only
on projecting machines licensed, by the licensor under let- •
ters patent owned by it.” The only express license granted
to the rental exchange, in the rental exchange agreemnt,
is that contained in that clause, is it not, that is, the
license under the said reissued letters patent No. 12,192?

Mr. Caldwell: I object to that on the ground
that it calls upon the witness to construe the con¬
tents of n written document which is in evidence,
and on the further ground that the document speaks
for itself.

lie Witness: Now, will you read the question?

The Examiner repeats the question as follows:

“Q. This granting clause in this exchange agree¬
ment says, ‘The licensor hereby grants to the licensee
for the term, and subject to the conditions expressed
in the conditions of the license hereinafter set forth,
the license under the said reissued letters patent
No 12,192, to lease licensed motion pictures from the
licensed manufacturers and importers, and to sub¬
lease said licensed motion pictures only on project¬
ing machines licensed by the licensor under letters
patent owned by it.’ The only express license grant¬
ed to the rental exchange in the rental exchange

1 . . . . . . . .

Frank L. Dyer, Cross Examination. 1709

1708 Prank h. Dyer, Cross Examination.

the Kleine and Biograph service? A. That I do not recall, '1

1 not, that is, the license under the said reissue let-

ters patent, No. 12,192?” q

Q. That is to say, they were all theatres that were tak-

ing film other than that made by the so-called Edison li-

The Witness: No. Upon reflection, and I have been

censees? A. Yes, sir.

giving rather curbstone opinions to your questions — it

Q. Theatres generally throughout the country had been

strikes me that the expression, “to sublease said licensed

displaying motion picture films from the date 1904, the

motion pictures for use only on projecting machines licensed

date of the film reissue No. 12,192, down to the Spring of

by the licensor, under letters patent owned by it,” includes

1908, when these suits were brought? A, Yes, sir, that is

the other patents.

correct. ■

Q. The other patents are not named, are they? A. Yes,

Q. I show you a paper, a copy of a contract, dated April

; sir, they are named in the first part of the license agree-

21st, 1910, between the Biograph Company and the General 2

* ment.

Film Company. Will yon please look at that. A. (wit-

Q. Do you think that is a frank answer? A. I resent

ness examines paper.)

i that.

Mr. GnosvENOit: Mr. Examiner, will you mark

Mr. Kingsley: I object to the witness being

that as an exhibit?

t asked to characterize his own answer.

The Examiner murks the paper examined by the

witness as Petitioner’s Exhibit No. 242.

The Witness: My answers are always frank, and I re-

sent the imputation.

By Mr. Gkosvenor:

Q. Mi-. Dyer, were a series of contracts of the same 8

g By Mr. Grosvenor:

tenor as this instrument which I have shown you, executed

Q. Mr. Dyer, did you have charge of the suits that were

on that date named, April 21st, 1910, between the General

i brought against the various exhibitors in the Spring of 1908

Film Company and each of the so-called Patents Company

\ in Chicago under the film patent? A. Yes, sir.

licensees? A. I think that is so, but I cannot state whether

| Q. How many suits were brought under the Film Pat-

they were all executed on that day or not.

| ent at that time? A. I don’t recall. Quite a good num-

Q. In any event, they were executed about that time?

f her.

A. I think that is so, yes.

\ Q. Something over forty, weren’t there? A. I don’t

Q. It is a fact, is it not, that all the common stock of

| think there were so many as forty. I thought there were

the General Film Company was portioned out among the

! .in the neighborhood of thirty.

Patents Company licensees? A. It is not.

Q. And most of those were in Chicago? A. Yes, sir.

Q. How much of that common stock was owned or 4

4 Q. And many of them were against theatres, weren’t

| taken by-others than the Patents Company licensees when

they? A. Yes, sir, I think they all were.

!' the General Film Company was organized? A. In the case

Q. This was after the conclusion of the so-called Edi¬

of the Essanay Company, the stock stands in the name of

son licenses, and the beginning of the war between the

(\ George K. Spoor, and in the case of the Selig Company, it

Edison camp and the Biograpli camp? , A. That 'is correct.

w stands in the name of W. N. Selig.

Q. Had there, been any period prior to this time, when V

Q. And George K. Spoor is the principal owner and of¬

you had brought a lot of suits against motion picture thea-

ficer of the Essanay Company, one of the Patents Company

fl'es, based on the Film Patent, and if so, when? A. I do .

licensees? A. I understand so.

not recall -that there was any period/ ,

Q. And Selig is the principal owner and officer and man-

Q. Were these theatres all theatres, that were taking

1770 Frank L. Dyer, Cnoss Examination.

ager of the Selig Company, another of tlic Patents Com¬
pany licensees? A. I understand that is so, but I made my
statement to emphasise the fact that the agreements which
you speak of were made with the Selig and Essnnny Com¬
panies and not with those stockholders.

Q, Well, all of the common stock of the General Film
Company when it was organised, was all issued to the Pat¬
ents Company licensees except the amounts which were is¬
sued to the two individuals you have named, Spoor and
Selig, who received the allotment of their companies in¬
stead of the allotment going directly to those companies?
A. I think that is so.

Q. You may state whether or not the common stock in
the General Film Company held by the Edison Company
was deposited pursuant to this agreement with the Empire
Trust Company, subject to the condition that it should be
released or bought back in case the Edison Company went
out of business? A. I do not think it was. I do not think
any of the stock was deposited with the Empire Trust Com-

Q. Are you able to stnte whether or not these agree¬
ments were carried into effect? A. They were not, no, sir.

Q. They were not carried into effect? A. They were not
carried into effect, no, sir.

Q. Was the common stock of the General Film Company
deposited with any depository? A. I do not think it was.

Q. Are you able to testify whether or not — A. (inter¬
rupting) : No, sir, I am not able to testify. The Empire
Trust Company would be the company, but I do not think

Mr. GllOSVBNOR: I offer this agreement in evidence.
By Mr. GnosvnNoit:

Q. Who would be able to testify on the part of the Edi¬
son Company directly as to whether or not any stock held
by the Edison Company in the General Film Company was
at any time deposited with a depository? A. The Treasurer
of the company could testify positively to that fact.

Mr. Caldwell: The offer of that paper is objected
to on the ground that the evidence shows it was never
carried into effect. '

Fuanic L. Dyer, Cross Examina

1771

Mi-. Kingsley: The same objection.

(0 The paper, marked Petitioner’s Exhibit No, 242,

is received in evidence and is ns follows :

Petitioner’s Exhibit No. 242. E. H.

TO ALL WHOM IT MAY CONCERN: Be It Known
that the Biograph Company (hereinafter called the Vendor),
a corporation organized and existing under the Laws of the
State of New Jersey, and having n place of business in the
City, County and State of New York, for and in considera¬
tion of the sum of One Dollar (§1), to it in hand paid by the
GENERAL FILM COMPANY (hereinafter called the Ven¬
dee), a corporation organized and existing under the laws
of the State of Maine, and having an office in the City,
County and State of New York, and for other good and valu¬
able considerations from the Vendee to the Vendor moving,
the receipt of all of which is hereby acknowledged, hereby
covenants and agrees:

I. That in case, prior to August 20, 1919, the Vendor
should become bankrupt or a certain license in writing now
held by the Vendor from the Motion Picture Patents Com¬
pany, of New York City (to manufacture motion pictures for
the use of cameras under reissued letters patent No. 12,037,
dated September 30, 1902, letters patent No. 029,003, dated
July 18, 1899, and letters patent No. 707,934, dated August
20, 1902, and containing the inventions of reissued letters
patent No. 12,192, dated January 12, 1904) should be ter¬
minated, then and in either of such en'ses the Vendee shall, on
paying therefor one hundred dollars per share to the Empire
Trust Company of 42 Broadway, New York City, as Trustee
for the use and benefit of the Vendor promptly after knowl-
edge.by the Vendee of the happening of such event or events,
become the owner of the entire right, title and interest in and
to the one hundred slinres of the common stock of the Vendee
now owned by the Vendor, nml any and all additional shares
© of common slock of the Vendee hereafter, and prior to Au¬

gust 2(1, 1919, owned or controlled by the Vendor; and in
order to facilitate the transfer in such case of such shares

1772 Frank L. Dyer, Cross Examination.

1 the certificate for the. one hundred shares aforesaid now owned

by the Vendor and deposit said certificate, assignment and ($

power of attorney, with the Trustee aforesaid, and will there¬
after, and ns soon as the ownership or control thereof is ac¬
quired by the Vendor, execute or cause to he executed in like
manner the assignments and powers of attorney endorsed on
the certificates of any and all additional shares of such com¬
mon stock the Vendor may hereafter own or control, and de*.
posit such certificates, assignments and powers of attorney
with the said Trustee; said Trustee being hereby authorized
and empowered by the Vendor to deliver to the Vendee all

2 of said certificates so deposited with the Trustee on the hap¬
pening, prior to August 20, 1919, of either of the events
aforesaid and the payment as aforesaid by the Vendee of the
sum of One Hundred (100) Dollars for each share of such
stock to said Trustee for the use and benefit of the said Ven¬
dor.

II. That the Vendor will not, prior to August 26, 1919,
without tlie. consent in writing of the Vendee, assign, trans¬
fer or otherwise dispose of or encumber any of the stock

o aforesaid now owned or hereafter owned or controlled by the
Vendor, or of any light, title or interest therein or thereun¬
der, to any person, firm or corporation other than the Vendee.

III. That a duplicate of this opinion, duly executed by
the Vendor, shall be deposited with said Trustee.

IN WITNESS WHEREOF the said Vendor has executed
these presents (in duplicate) this 21st day of April, 1910.

(sg.) BIOGRAPH COMPANY,

By (Sg) J. J. Kennedy, President.

4 In the Presence of

(Sg) j. J-. Kennedy.

(Sg) William Pelzer.

By Mr. Giiosvenor : ®

Q. Mr. Dyer, who was the principal attorney in devising
this so-called Patents Company and the various Patents Com¬
pany license agreements, that is, between the Patents Com¬
pany and tlie manufacturers, and then between the Patents

Frank L. Dyer, Redirect Examination. 1773

Company and tlie exchanges, and the general arrangement? 1
O A. I think Mr. Philipp.

Q. M. B. Philipp? A. M. B. Philipp.

Q. And was he the attorney in tlie forming of the
General Film Company, and the issuing of those licenses?

A. That is my recollection, yes, sir.

Q. Aud was' he the attorney in making the agreements
between the Patents Company and the Eastman Kodak
Company? A. Yes, sir, although he was also the attor¬
ney for the Eastman Kodak Company, I think.

Q. And lie was also the attorney for Patlie Freres,
was he not? A. Yes, sir.

Mr. Grosvbnor : That is all.

Redirect examination by Mr. Caldwell :

Q. Mr. Dyer, why was the litigation conducted uguinst
the Biograph Company, subsequent to 1904, on tlie camera
reissue given precedence over the litigation on the film
reissue? A. As I have stated, it is my present recollec¬
tion that when the two reissue patentB were granted, No.
12,037, and 12,038, suits were brought simultaneously upon 8
both patents against the Biograph Company, and those
suits progressed simultaneously some time. It then de¬
veloped that the Bipgrapli Company were relying upon the
fact that tlie word “eqni-distant” had been omitted from
the claims of tlie first film reissue, No. 12.038, and intended
to argue that because of this omission, these claims were
actually broader than the claims of the original patent,
not narrower. Therefore, the. suit on the first film reissue
patent was dropped, and that patent was reissued again in
January, 1904, No. 12,192. At that time, we had gone
ahead for some time, probably upwards of two years, dr 4
almost two years, with the camera patent, and to start a
suit all over again on tlie film patent would necessitate com¬
mencing it from the beginning, so that the suit on the

O camera reissue patent was, therefore, the one that was

pressed, and we felt that if we should succeed in this
suit, it would have the same effect ns if we had succeeded
in both suits.

Q. Were not the defenses in tlie two suits on tlie cam¬
era and tlie film, respectively, substantially the same?

1774 Frank L. Dyer, Redirect Examination.

Frank L. Dyer, Redirect Examination. 1775

Mr. Grosvenob: I object to that as improper.
On the further point, that it states something which
bus not been testified to — in other words, there
was not any suit on the film patent reissue No. 12,-
102 for four years, and, therefore, there was no de¬
fense to characterise.

Mr. Caldwell: He has stated, however, that
there was a suit on that first film reissue.

Mr. Grosvbnor: If you refer, then, to No. 12,-
038, which was abandoned in 1904, of course, that
makes the question more distinct. .What is the
question?

The Examiner repeats the question as follows:

“Q. Were not the defenses in the two suits on
the camera and the film, respectively, substantially
the same?”

The Witness: Well, of course, I don’t remember the
details of the answers, 'but my recollection is that they
were the usunl defenses in patent suits, and I believe
also that there were some specific defenses that would. not
be common to both suits, that is to say, the defense in' the
film patent suit, probably asserted the broadening of the
claim, and the defense in the camera patent suit probably
set up a large number of alleged anticipating machines,
which I would not suppose would be included in the defense
on the film patent, but they were, as I recall, the usual
stereotyped patent defenses.

By Mr. Caldwell:

Q. Was not a large part of the prior art set up by these
defenses in the two suits, substantially the same? A. I
think that is so.

Q. Did you believe, at tbnt time, that the sustaining
of the camera patent would give you substantially the
same monopoly of the art that would have resulted from
the sustaining of both patents?

Mr. Grosvenob: Objected to as to what his be¬
lief would have been, as immaterial.

Mr. Caldwell : I believe it is material, on the
charge that the patent owner was negligent or sloth¬
ful in the prosecution of liis (patent rights.

The Witness: Yes; we considered the monopoly prac¬
tically co-exteusive in both cases.

By Mr. Kingsley:

Q. Did Mr. Philipp represent the Edison Compnny —

Mr. Grosvbnor (interrupting) : Is this part of a
cross examination, or is this part of a redirect?

Mr. Kingsley: This is part of the cross exam¬
ination.

Mr. Grosvenob: By another defendant?

Mr. Kingsley: By another defendant.

By Mr. Kingsley :

Q. Did Mr. Philipp represent the Edison Company at
the time the Edison license agreement was formed and
promulgated? A. No, sir, he represented the Pnthe con¬
cern at that time.

Mr. Grosvbnor: I. wish you would Btate, at the
beginning, Mr. Examiner, that this iB cross examina¬
tion by Mr. Kingsley, and on whose part it is.

Mr. Kingsley : I am asking this witness ques¬
tions on behalf of the clients whom I represent, and
it is on record which clients I represent.

Mr. Grosvenob: And you are not making him
your witness?

Mr. Kingsley: I am not making him my wit¬
ness, but I do not care whether be is or not in
respect to these particular questions.

By Mr.'; Kingsley :

Q. Did Mr. Philipp represceut the Edison Company in
connection with the negotiations which culminated in the
formation of the Patents Company? A.' No, sir, I think
he directly represented the Pathe concern.

Q. Did you represent the Edison Company, either alone
or in conjunction with someone else in connection with the
negotiations, regarding which I have just asked you? A.
I represented the Edison Company in all the negotiations.
I was the representative of the Edison Company.

Q. Do yon know whether or not Mr. Philipp prepared
the rental exchange license? A. I do not recall that.

1770 Thank L. Dyer, Reciioss Examination.

Frank L. Dyer, Recross Examination. 1777

Q, Or the Patents Company? A. I do not recall tliat.

Q. Do you know whether or not Mr. Philipp prepared
the projecting machine license ot the Motion Picture Pat¬
ents Company? By that I mean the license to manufac¬
ture projecting machines. A. I don’t recall that.

Mr. Kingsley: That is all.

Mr. Grosvenor: Are you through with him, Mr.

Caldwell?

Mr. Caldwell: I ain through.

Recross examination by Mr. Grosvenor:

Mr. Dyer, the greater part of the commerce, as I under¬
stand your testimony on . direct examination, relating to
motion pictures, is the commerce in positive film;. isn’t that
the fact?

Mr. Caldwell: That question is objected. to on
the ground that it assumes that there is a commerce
in the motion picture art.

Mr. Kingsley : I also object to the question on
the ground that it is attempting to compel the wit¬
ness to characterize transactions in the motion pic¬
ture art as commerce.

Mr. Gbosvenor: I do not want to put you in an
unfortunate predicament, Mr. Dyer. You testified
yesterday that at any one moment there are some 20,-
000 films in use or in transit— which— in the coun¬
try?

The Witness : In transit.

By Mr. Grosvenor:

Q. That is, at this very moment at which you are talk¬
ing, it is your best judgment that there are 20,000 different
films in transit going from the manufacturers to the ex¬
changes, or from the exchanges to the exhibitors, or on their
homeward journey from the exhibitors to: the rental ex¬
changes?

Mr. Kingsley: I object to that question, on the
ground that the witness specifically stated yesterday

when testifying regarding this phase of the case,
20,000 plays were in transit.

Mr. Grosvenor : Will you read the question now,
and let him answer? He nodded, but lie did not
answer.

The Examiner repeats the question as follows:

“Q. That is, at this very moment at which you
are talking, it is your best judgment that there are
20,000 different films in transit going from the man¬
ufacturers to tiie exchanges, or from the exchanges
to the exhibitors, or on their homeward journey from
the exhibitors to the rental exchanges?”

The Witness: I think it within the bounds of possi¬
bility to say that at all times there are 20,000 of these mo¬
tion picture plays in their passage from the producer to the
exchanges, from the exchanges to the exhibitors, from the
exhibitors back to the exchanges, and from the exchanges
back again to the producers.

By Mr. Grosvenor:

Q. Then much the larger portion of the business relat¬
ing to the motion picture art is or consists of the business
in these motion picture films? A. Yes, sir; that is, the
larger part of the business by long odds, is the purely ar¬
tistic, theatrical side. The sale of machines, and acces¬
sories of that kind, is a very small percentage.

Q. And that is an accurate description of the conditions
existing in the last five or six years? . A. Well, I think five
or six years ago there were more machines bought, beenuse
theatres were starting, and they were getting their sup¬
plies of machines in, and I do not think at the present time
so mnny machines arc sold.

' Q. But what I mean is, it has always been the case, lias
it not, that the business in positive films has been much the
larger part of the business, or much larger' than any other
one branch of the business? A. Mitch larger tiian the ma¬
chine business or any other accessory sales.

Q. Yes. In spite of that fact, in that period from 1004
down to 1908, yon were trying to enforce only your — and
by “you” I mean the Edison Company — your pntent on the

1778 Frank L. Dyer, Reoross Examination.

Frank L. Dyer, Reoross Examination. 1779

camera, and you were not in those years, as you have testi¬
fied, trying to enforce or maintain your rights or alleged
rights under the film reissue No. 12,192?

Mr. Caldwell : That is objected to on the ground
that it assumes something that the witness has not
testified to. He has not testified that they were not
endeavoring to enforce their rights under the film
patent, but his examination on that point was di¬
rected by counsel for the petitioner to the litigation
between the Edison Company and the Biograph Com-
pany.

Mr. GnosvENOR : I think, Mr. Caldwell, if yon will
refer to your last questions on the redirect, you will
see that my question is a fair one.

Mr. Caldwell: I thought that you were refer¬
ring to your questions.

The Witness: Will you please rend the question?

■ Mr. Guosvenoii : I understand that yon on your
redirect brought out the fact that he was pressing
the suit on the camera patent!

Mi1. Caldwell: (interrupting) : Against the Bio-
graph Company.

Mr. Grosvenor :_On the ground that he thought
that would establish their entire rights.

Mr. Caldwell: Against the Biograpli Company.

Mr. Grosvenor : Read the question.

The Examiner repents the question ns follows:

“Q. In spite of that fact, in that period from
1901 down to 1908, you were trying to enforce only
your — and by ‘you’ I mean the Edison Company—
your patent on the camera, and you were not in those
years, as you have testified, trying to enforce - or
maintain your rights of alleged rights under the film
reissue No. 12,192?”

The Witness: As X have stated with regard to the pat¬
ents, they were substantially coextensive, and the suit
against the Biograpli Company was particularly selected —

Mr. Grosvenor: (interrupting) : Wlint suit? The
suit on the film? . /

. The Witness: The suit on the camera patent. The
camera reissue. It wus selected because if we were success¬
ful in that suit, as we eventually were, we would be able to
get preliminary injunctions; in other words, it was not
necessary to go ahead with the elaborate details of a patent
suit against the other infringers.

By Mr. Grosvenor:

Q. You did not expect to be able to stop the importation
of foreign films by winning a suit against the Biograpli
Company on the camera patent, did you? A. I do not think
that foreign films would be stopped by the the successful
termination of the suit on a camera patent, but that was
the most potent infringement at the time, and we were con¬
fining our energies practically entirely to .that

Q. That is, the camera patent? A. The camera patent.

Q. Mr. Dyer, you bought, didn’t you, in the height, of
tlie war between the Edison and the Biograpli companies,
some shares of the stock of the Biograpli Company? A. YeB.

Q. When was that purchase made? A. I do not recall
when that was made, but Mr. Marion of tlie Kalcm Company
told me that he had some stock of the Biograpli Company,
with which he was formerly connected, and in view of the
bitterness of the struggle between the two concerns, I thought
it might be well to get, hold of this stock, so that, if possible,
we could attend stockholders’ meetings, and we bought the
stock. It was some time after the Edison licenses were
granted and before my negotiations with Mr. Marvin. There¬
fore I should say it may have been in May or June of 1908.

Mr. Grosvenor : That is all.

Examination by Mr. Kinoblby:

Q. What was tlie amount of that stock, Mr. Dyer? A.
. Twenty-five shares.

Q. What is the par value of those 25 shares? A. My
recollection is, that par value was $100 a share, and . we
bought it for ?10 a share.

Q. Wlint was the capitalization of the Biograpli Com¬
pany at. that time? A. I don’t remember. Very large.

Mr. Kingsley: That is all.

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— y dear Ur. Wilson:— ^ v *»

I enclose herewith in duplicate memorandum \ vy
on Patents Company - affairs which I think covers what youj^
had in mind when I saw you on Wednesday. ^3^

The matter was written up yesterday before I vVv*
had received a copy of the proposed decree from the c*f f

Government, which I enclose. I have also sent a copy Oir A,
this proposed decree to hr. Holden. V*

Tn t>^s proposed decree the Government does
not ask foi the "dissolution of the Patents Company, and
in fact, outside of declaring various license agreements
and agreements between the General Film Company and. the
licensed manufacturers unlawful, has done very lit-le
excent to provide that either the licensed manufacturers
shall dispose of their common stock, or shall permit
the preferred stockholders to vote.

There will probably be some negotiations in
reference to this form after the various defendants have
seen it, and I shall keep you advised of what is going

You

***. trVVv

GFS/LHB

Enclosures.

\ v V

[ENCLOSURE]

11/16/15

NOTES ON PRESENT STATUS OF PATENTS
COMPANY AFFAIRS.

Patents

At the present time, the Patents Company owns only
projecting machine patents, of whioh that for the Latham
loop is the only one of any great value.

Under these patents, praotioally all of the machines
now in use have been made and sold by the licensed machine
manufacturers under the condition that they will be used
only with film lioensed by the Patents Company and the pay¬
ment of a weekly royalty to be fixed by the Patents Company.
The license to use ends if the Patents Company ceases to own
the patents. So do the licenses to machine manufacturers.
The assignments of the patents were made with the provision
that if the Patents Company is dissolved, the patents revert
to their original owners, the Biograph Company and Armat
Company. The decree in the Government oase will probably
require this dissolution. If the Patents Company does not
appeal, the Company must then dissolve and the Latham patent
will go to the Biograph Company free of , any outstanding
lioenses. The Edison Company will be converted from a half
owner to a possible infringer. Marvin has hinted at the'
possibility of the Patents Company's not appealing. This
should not be agreed to. unless the Edison Company's present
rights are preserved.

-1-

[ENCLOSURE]

There are now two infringement suits pending on the
Latham patent, which are expeoted to be tried before the end
of the year. One is against an exhibitor, the Universal Man¬
ufacturing Company and the Universal Exchange, the other is
against the Greater New York Exchange (Fox) and one of Fox's
theatres)-. In each case, it is sought to hold the
exhibitor liable for his weekly royalty and the film manu¬
facturer and film exchange as contributory infringers for
furnishing him film by which he is enabled to infringe. The
success of these suits is problematical, but it is the only
way now to derive revenue from the patent, and if they
succeed, the Patents Company v/ill be in a position to en¬
force its weekly royalties from all machines until August,
1919, when the patent expires. No attempt is being made to
enforce the restriction as to the use of licensed film
because of possible complications under the Clayton Act.

Royalties.

tflth the stoppage of payment by the General Film
Company, the Patents Company's only source of royalties is
from the maohine manufacturers at $5, per machine. This
amounts to about $25,000. per year, payable quarterly.

Licenses

The film manufacturers agreed to pay a flat
royalty of $2,500 per year payable quarterly. Most of them
are in arrears and the Patents Company has sent notices of

-2-

[ENCLOSURE]

an intention to oanoel these licenses unless payment is made.

The General Film Company has not given up its
license, but simply notified the Patents Company of its
intention to suspend payments pending the appeal in the Gov¬
ernment case. Instead of oanceling the license, it is the
intention of bringing suit under the license contract for
the amount the General Film Company is in arrears, now
amounting to about §6,000. Other suits will be brought
from time to time as the other arrears accumulate . The
only defense the General Film Company oan have is the
illegality of the contraot. To make this defense would
require the General Film Company to allege that the contraot
is in furtherance of an unlawful conspiracy and in view of
the advantage which triple damage claimants may make of this
allegation, it seems hardly likely such a defense will be
made. The Patents Company ought, therefore, to be able
to enforoe the collection.

Damage Suits

There are three of these suite now pending, one
by the Greater New York Film Rental Co. for §1,800,000., one
by the Imperial Film Exchange for §750,000. and one by the
alleged successor to the Lake Shore Film Exchange for §300,000.
This last suit is against the- General Film Company only; the
others are against all the manufacturers, the General Film
Company and the Patents Company. None of these- suits will be

-3-

[ENCLOSURE]

■brought to trial before the dcoree in the Government case

is signed, and if an appeal is taken from that, (which every
one has agreed should be done) the trials will probably
be held up until the Supreme Court has decided the case. Up
to date, the Government has not submitted a form of decree
and after it does, there will probably be considerable
time before its final form is settled and signed.

Resources

The Patents Company bank balanoe is about §15,000.

Its debts are paid to date.

Its present weekly expenses are about §1,200. per
month, exclusive of legal expenses. A revenue of about
f3©0. per month is derived from charges to the manufacturers
for quarters and services in censoring film. If this income
is withdrawn, the expense will be deoreased, though not by the
same amount.

By an arrangement made about 1911, the expense of
various litigations, including the Government_'euit and other
matters, were to be paid, one-third by the Patents Company,
one-third by the General Film Company and one-third by the
licensed manufacturers. This account has never been balanoed
and under it the General Film Company now owes the Patents
Company about §40, 000. and the licensed manufacturers about
$41,000. The settlement of this account has been repeatedly

-4- '

[ENCLOSURE]

urged but has always been held up because the licensed manu¬
facturers could never agree amongst themselves on what basis
each should pay his share of the one-third for which all are
responsible .

Since the General Film Company has broken its agree¬
ment as to royalties, the Patents Company should withdraw from
its agreement to stand one-third the expense of the Government
case and possibly of the triple damage suits, at least as to
any future expenses.

If the revenue from machine manufacturers continues.
The Patents Company should be self-sustaining at least until
some of the litigation above referred to is determined.

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^ ns My dear Mr. Wilson: — ^ * C. H. WILSON j

I enclose herewith a oopyiof a revised draft of a
V$ ' proposed decree in the Government case submitted by the
\ic Department of Justioe for our consideration. The previous
draft submitted was drawn up by Mr. Grosvenor apparently
without consulting his side partner, Rogers, who represents
the Greater New York. Rogers has now gotten in touch with
Grosvenor and has put a couple of clauses in here somewhat
veiled, to be sure, which are intended to directly benefit
the Greater New York.

I first oall your attention to the fact that this
second draft proposes .that the manufacturers shall dispose
of all of their holdings of oommon and preferred stock* of
the G.F. and are not permitted to aoqulre any thereafter.
(Eighth) Notice that nothing is said about the holdings
of stook of the several individual defendants.

I also oall your attention to paragraph Eleventh
which, of course, is intended direotly to compel the man¬
ufacturers to continue to deal with the Greater New York.
You will note that it is not merely limited to two or more
manufacturers dealing with the General Film Company, but
with any other agency. In other wordB, if Edison and
Kleine continue to distribute through Kleine’s agenoies,
this paragraph would compel the Edison Company to give
oopies to the Greater New York. I think that oomment on
this is unnecessary. In my opinion, the Court will have no
authority to Impose any such restriction. All such condi¬
tions are Impdsed merely as alternatives to breaking up
the alleged combination into its original components,
and that, in my opinion, is already provided for in com¬
pelling the manufacturers to give up their stook in the G.F.
as well as any agreements with that company. To further
saddle them with a positive prohibition that if they wish
to engage in oommeroe the same as other concerns are now
doing, they shall be bound by restrictions not ''imposed upon

Mr. C. H. Wilson -2- II/30/I5.

suoh others is, in my mind, absolutely incomprehensible.

I believe on such a situation being pointed out to the
Court, it will not be approved.

In Paragraph Fifth the Court is made to deolare
the assignments of the patents to the Patents Company illegal.
From a lawyer’s standpoint, I am frank to say I do not see
how this oan be. The Court may find that the assignments
were made in pursuance of an unlawful agreement, but
certainly it oannot say that the assignments themselves are
unlawful.

Paragraph Twelfth is aimed directly at the suits
which we now have pending on the Latham patent. While these
suits are not brought on the license agreements and are
straight infringement suits, the defendants will undoubtedly
raise a question of a lioense, and they already have placed
themselves in the peouliar position of alleging that they
are lioensed under agreements which are unlawful. Obviously
it would be a nice short out for the Greater New York to have
us stopped from proseouting these suit s, but I think a way
out oan be found by which the Court will be satisfied to
let us oontinue the proseoution of these suits. The
illegality of the assignments to the Patents Company which is
set forth in Paragraph Fifth, of oourse immediately raises
the question as to the status of the patents in the Patents
Company's hands at any time, and consequently the possibility
of granting lloenses if the Patents Company had no title.

In short, the statements made in the decree in reference to
the patents are so absurd and lead to suoh ridiculous con¬
clusions, that I cannot believe the Court is going to sanction
them, and I do not believe that Mr. Grosvenor appreciated
the snarl whioh suoh a deoree would involve. Copies of this
decree are being sent to the representatives of the different
defendants, and there probably will be a get-together in
reference to it after the several lawyers have had time to
digest it. You can see from its form that Grosvenor simply
submits it as a form, since it is not complete as to Paragraphs
Eighth and Thirteenth.

I am sending a copy of the decree and of this letter
to Mr. '

GFS/LMB

Enclosure

Yours very truly,

[ENCLOSURE]

IN THE DISTRICT COURT OF THE UNITED STATES
FOR THE EASTERN DISTRICT OF PENNSYLVANIA.

THE UNITED STATES OF AMERICA,
Petitioner,

-against-

MOTION PICTURE PATENTS COMPANY, et al.
Defendant e.

BEFORE OLIVER B. DICKINSON, UNITED STATES DISTRICT JUDGE.

DEC REE.

This cause oame on for final hearing upon the
pleadings and all the evidence and was argued on behalf
of the petitioner by Edwin P. Grosvenor, Speoial Assistant
to the' Attorney General, . and on behalf of the defendants
by Charles F. Kingsley, Melville Church and Hon. Reuben 0.

Moon, and thereafter, upon consideration thereof, the
Court announced and caused to be filed, on.Ootober 1, 1915,
its written opinion therein.

Whereupon the Court adjudged, ordered and decreed
as follows: . .

FIRST? That the petition he and is hereby dismissal
as to the defendant. Holies Manufacturing Company.

-1- ; ‘

■■ - • :

[ENCLOSURE]

SECOND : That the defendant s (other than the Melies

Manufacturing Company, against whom the petition is
dismissed) and each of them, in the manner set forth and
described in the petition, have attempted to monopolize
and have monopolized and have combined and conspired, among
themselves and with eaoh other, to monopolize a part of the
trade or commerce among the several states and with foreign
nations, consisting of the trade in films, cameras, pro¬
jecting machines, and other accessories of the motion-picture
business, as charged in the petition of complaint filed
herein, in violation of the Aot of Congress, approved July
2, I89O, entitled "An Act to protect trade and commerce
against unlawful restraints and monopolies, (See Opinion,
page 13).

THIRD: That the defendants (other than the said Melies

Manufacturing Company) and each of them, in the manner set
forth and desoribed in the petition, have entered into and
are engaged in a combination and conspiracy in restraint
of trade and commerce among the several States and with
foreign nations in films, cameras, projecting machines and
other accessories of the motion picture business in viola¬
tion of the Act of Congress approved July 2, I89O, entitled
"An Act to protect trade and commerce against unlawful
restraint and monopolies."

FOURTH: That the contracts, licenses and agreements
enumerated in the petition, to wit, the license agreements
entered into between the Motion Picture Patents Company and
the Patents Company licensees, to wit, the Biograph Company, ,
the Edison Manufacturing Company, Essanay Film Manufacturing

-2-'

[ENCLOSURE]

Company, Kalsm Company, George Kleine, Lubin Manufacturing
Company, Pat he Freres, Sells Polyscope Company and
Vitagraph Company of America; the license agreements between
the Patents Company and the rental exchanges; the licenses
from the Patents Company to the exhibitors; the license
agreements between the Patents Company and manufacturers of j

exhibiting machines; the license agreements between the
Patents Company and the General Film Company; the agreements
between the General Film Company and the said Patents
Company licensees, to wit, the Biograph Company, the
Edison Manufacturing company, Eseanay Film Manufacturing
Company, Kalem Company, George Kleine, Lubln Manufacturing
Company, Pathe Freres, Selig Polyscope Company and Vitagraph
Company of America; and all other license agreements
referred to and described in the petition, the answers, or
in the evidence superseding the above enumerated license
agreements, have been and are the means adopted and used by
the defendants in order to carry into effect the objects and
purposes of said unlawful combination and conspiracy in
restraint of said interstate and' foreign trade and commerce <

in films, cameras, projecting machines and other accessories
of the motion picture business in violation of said A.ot of
Congress and that the said, contracts, licensee and agreemenl s ^
are, therefore, hereby declared illegal and the defendants
and all and each of them and their officers, agents, servants
and employees are enjoined and prohibited from doing anythi: g
! in furtherance of said agreements and from enforcing in any

manner said agreements or any of the terms thereof, , _

; yiFTH ; That the said contracts, agreements 'and ^licen¬
ses enumerated in the petition and the combination
therein described was a conspiracy in restraint of

[ENCLOSURE]

trade and commerce among the several States and with foreign
nations and were and are illegal. (See Opinion, page 13).

SIXTH: That the acquisition by the defendant, General

Film Company, of the rental exchanges enumerated in the
petition and in the manner therein described was in pursuance
of the general purpose and plan of defendants to monopolize
said trade and oommeroe and was unlawful and in violation

of said Act of July 2, I690, and that in order to bring
about a condition in harmony with the law, the defendants,
Biograph Company, Edison Manufacturing Company, Eesanay
Film Manufacturing Company, Kalem Company, George Kleine,
Lubin Manufacturing Company, pat he Freres, Selig Polyscope
Company end Vitagraph Company of Amerioa, before

1916, shall either dispose of their hold¬
ings of common stook of the General Film Company or shall
amend the by-laws and charter of the General Film Company so
as to grant to the preferred stockholders an equal right
with the common stockholders of the oompany to vote at
meetings of the stockholders, eo that preferred stockholders
shall have the right to vote on all matters in reepect of
which the common stockholders have- a right to vote.

SEVENTH: That the said defendants, their officers,
agents, servants and employees, are enjoined and prohibited
from continuing their said combination, conspiracy and
monopoly and attempt to monopolize interstate commerce. in
said articles by means of the said unlawful contracts or
license agreements or by any other means similar thereto.

■' - , . 4 '■

[ENCLOSURE]

EIGHTH: That the said defendants, their officers,

direotors, agents, servants and employees, are enjoined and
prohibited from resuming, engaging in, continuing ox
carrying into farther effect the combination and conspiracy
the monopoly and attempt to monopolize adjudged illegal
hereby and from engaging in or entering into any like
combination or conspiracy or monopoly or attempt to monopolizf
the effect of which will be to restrain commeroe in said
articles among the several States of the United States or
in the territories of the United States or with foreign
countries by making any express or implied agreement or
arrangement, together or one with another, like that
adjudged illegal herein relative to the control or manage¬
ment of the business of the said defendants in films,
cameras, projecting machines and other accessories of the
motion pioture business, the effect of which will be to
prevent each and any of them from carrying on interstate
and foreign trade and commerce in said artioles in competitil
with, the others.

NINTH: That this decree shall not be oonstrued to
prevent whoever may be the owner or owners of the several
patents enumerated in the petition, the life or lives of
which shall not already have expired, from granting lawful
licensee to any of the defendants or others to use such
p e-tent or patents or to prevent the defendants ox others
from taking lawful licenses to use any of such patent or
patents.

TENTH: That judgment for its lawful costs is hereby
given in favor of the petitioner and' against the- defendants

-5-

[ENCLOSURE]

as to whom the petition hae not been dismissed.

ELEVENTH: Nothing in this decree contained shall
prevent the defendants or any of them from the institution,
prosecution or defense of any suit, aotion or proceeding
to prevent or restrain the infringement of any patent or
patents or othervfise assert or defend a claim to any
property or rights therein.

[ENCLOSURE]

IN THE DISTRICT COURT OF THE UNITED STATES
FOR THE EASTERN DISTRICT OF PENNSYLVANIA,

-against-

MOTION PICTURE PATENTS COMPANY, et al.,
Defendants.

BEFORE OLIVER B. DICKINSON, UNITED STATES DISTRICT JUDC^:

DECREE.

This oause came on for final hearing upon the plead¬
ings and all the evidenoe and was argued on behalf of the pe¬
titioner by Edwin P. Grosvenor, Special Assistant to the
Attorney General, and on behalf of the defendants by Charles
F. Kingsley, Melville Chur oh and Hon. Reuben 0. Mbon,
and thereafter, upon consideration thereof, the Court announc
ed and oaused to be filed, on October 1, 1915* i"&3 written
opinion therein.

Whereupon the Coutt adjudged, ordered and decreed
as follows:

FIRST: That the petition be and is hereby dismissed

as to the defendant, Melies Manufacturing Company.

SECOND: The death of Samuel Long occurred after the
final hearing and there has been no revivor.

THIRD: That the defendant’s (other than the Melies
Manufacturing Company, against whom the petition is dismlsi
and each of thep, in the manner set forth and J.e^ojibed]^ii^ji
petition, have attempted to monop olize^and have monopolized
w^nd'haveroombined and conspired, among themselves and with

sbd)

[ENCLOSURE]

eaoh other, to monopolize a part of the trade or commerce
among the several States and with foreign nations, consisting]
of the trade in films, oameras and projecting machines and parts
thereof, as oharged in the petition of complaint filed herein!
in violation of the Act of Congress, approved July 2, I89O,
entitled "An Act to proteot trade. and commerce against unlaw-]
ful restraints and monopolies."

FOURTH: That the defendants (other than the said
Melies Manufacturing Company) and each of them, in the mannerl

set forth and described in the petition, have entered into ani
are engaged in a combination and conspiracy in restraint of
trade and commerce among the several states and with foreign
nations in films, oameras and projecting machines and parts
thereof in violation of the Act of Congress approved July 2,
I890, entitled"An Aot to proteot trade and oommeroe against
unlawful restraint and monopolies."

FIFTH: That the several agreements enumerated in the
petition for the assignment of patents to the Motion Picture
Patents Company; the several assignments of said patents to
said company pursuant to such agreements; the contracts, li¬
censes and agreements enumerated in the petition, to wit, the
license agreements entered into between the Motion Pioture
Patents Company and the Patents Company licensees, to wit,
the Biograph Company, the Edison Manufacturing Company, Essanf.y
Film Manufacturing Company, Kalem Company, George Kleine, Lubi n
Manufacturing Company, Pathe Freres, Selig Polyscope Company,
Vitagraph Company of Amerioa and Gaston and George Melies;
the license agreements between the Patents Company and the
rental exchanges; the licenses from the Patents Company to tie

[ENCLOSURE]

exhibitors; the lioense agreements between the Patents Com¬
pany and manufacturers of exhibiting machines; the lioense
agreements between the Patents Company and the General Film
Company-; the agreements between the General Film Company and
the said Patents Company licensees, to wit, the Biograph Com¬
pany, the Edison Manufacturing Company, Essanay Film Manufaot
uring Company, Kalem Company, George Kleine, Lubin Manufaotur
ing Company, Pathe Frerea, Selig Polyscope Company and Vita-
''graph Company of America, and Gaston and George Melles; and
all other license agreements referred to and described in the
petition, the answers, or in the evidence superseding or suc¬
ceeding the above enumerated license agreements and contracts,
and all lioenses under said patents so assigned to the Patents
Company, subject to the assignment to that oompany, have been,
were and are the means adopted and used by the defendants in
order to carry into effeot the objects and purposes of said
unlawful combination and oonspiraoy in restraint of said in¬
terstate and foreign trade and commerce in films, cameras and
projecting machines and parts thereof in violation of Baid
Aot of Congress and that the said contracts, lioenses and
agreements and assignments of patents are, therefore, hereby
declared illegal and the defendants and all and each of them
and their offloers, agents, servants and employees are enjoined
and prohibited from doing anything in furtherance of said
agreements and from enforcing in any manner said agreements
or any of the terms thereof.

SIXTH: That the said assignments, contracts, agreements

and lioenses enumerated in the petition and the combination

therein described was a oonspiraoy in restraint of trade and

oommeroe among the several states and with foreign nations

}

and were and are illegal.

■ SEVENTH : That the acquisition by the defendants of j

;he |

-3-

[ENCLOSURE]

rental exchangee enumerated in the petition and in the manner
therein described and their attempt to acquire or put out of
business other rental exchanges were in pursuance of the gen¬
eral purpose and plan of defendants to monopolize said trade
and oommeroe and were unlawful and in violation of said Act
of July 2, 1890.

EIGHTH: That in order to bring about a condition
in harmony with the law, the defendants,. Biograph Company,
Edison Manufacturing Company, Essanay Film Manufacturing
Company, Kalem Company, George Xleine, Lubin Manufacturing
Company, Paths Freres, Selig Polyscope Company, Vitagraph
Company of Amerloa, and Gaston Melies before
1916, ushall dispose of their holdings of common and preferred
stock of the General Film Company and shall file in oourt
affidavits or other proof satisfactory to the court aB evi¬
dence that they have complied with the deoree of the oourt in
this regard and said defendants shall be enjoined from here¬
after acquiring or holding any stook of the General Film Com¬
pany. (Note: T£is clause should be amplified to conform to
deoree in Reading case recently entered by MoPherson and
other Circuit Judges.

NINTH: That the said defendants, their officers,
agents, servants and employees, are enjoined and prohibited
from continuing their said combination, conspiracy and
monopoly and attempt to monopolize interstate oommeroe in
said articles by means of the said unlawful contracts or
lioense agreements or by any other means similar thereto,

TENTH: That the said defendants, their officers,
directors, agents, servants and employees, are enjoined and
prohibited from resuming, engaging in, continuing or oarrying
into farther effeot the combination and conspiracy, the>
monopoly -and attempt to monopolise adjudged illegal hereby

[ENCLOSURE]

and from engaging in or entering into any like combination j

or conspiracy or monopoly or attempt to monopolize the effect
of which will be to restrain commeroe in said artiolee among j
the several States of the United States or in the territories
of the United States or with' foreign countries by making any
egress or implied agreement or arrangement, together or one
with another, like that adjudged illegal herein relative to
the control or management of the business of the said defend¬
ants in films, oameras, projecting machines and other access¬
ories of the motion picture business, the effeot of whioh
will be to prevent each and any of them from oarrying on in¬
terstate and foreign trade and commeroe in said artiolee in
competition with the others,

ELEVENTH: As long as two or more of the Patents Company
licensees, defendant manufacturers, shall use the General j

Film Company as the common distributing agenoy for their j

films or shall use some other oommon distributing agenoy, j

they shall distribute their produot on equal terms to any
rental exchange whioh may now be handling their film. That
is to say, the purpose of this provision is to insure the
oontinuanoe of the present conditions and to prevent the de¬
fendants employing an exclusive distributing agenoy; the pur -
pose is also to furnish the exhibitor more than one souroe of
supply of these films so that there will be competition for
the business of the exhibitor in respeot to this class of

TY/ELFTH: Defendant Motion Picture Patents Company,
and other defendants other than the Melies Manufacturing
Company are enjoined and restrained from prosecuting ormoontinu-
ing the prosecution of any suit based upon the alleged in¬
fringement of any of the pat ente enumerated .in- the -petition .■
where the aot which defendants aver constituted the ground of

[ENCLOSURE]

infringement was merely the breach of one of the conditions
enumerated, in 8aid licenses for license agreements herein¬
above adjudged unlawful. That is to say, the purpose of
this paragraph of this decree is to prevent the prosecution
of suits where the alleged cause of action is founded upon a
violation of an unlawful contract or lioense agreement.

THIRTEENTH: Insert here a provision against the use

of a tying clause which the Latham patent . Confer

Shoe Machinery decree whioh should be used as a model.

FOURTEENTH: That judgment for its lawful costs is

hereby given in favor of the petitioner and against the
defendants as to whom the petition has not been dismissed.

Legal Department Records
Motion Pictures - Case Files

James H. White and John R. Schermerhorn v. Percival L. Waters

This folder contains material pertaining to the suit brought by two
Edison Manufacturing Co. employees, James H. White and John R.
Schermerhorn, against Percival Waters of the Kinetograph Co. The case was
initiated in the New York Supreme Court for the County of New York in
January 1 909 and involved kickbacks and conflicts of interest. The selected
items include the judicial finding from June 1 91 0 against the plaintiffs, along
with affidavits subsequently collected by the plaintiffs in order to reopen the
case and clear their names. The affidavits are by Alexander T. Moore, the
two plaintiffs, and their attorney, Selden Bacon. Among the items not
selected are briefs for the defendant, testimony from the second trial,
additional affidavits, and documents that duplicate information in the selected
material. The affidavits by Edison and William E. Gilmore from the first trial
have not been located.

SUPREME COURT
COU NTY OP HEW YORE,

JAMES H. WHITE and JOHN R. SCHER-
MERHORH,

Plaintiffs,

-against -

PERCIVAD It. WATERS,

Defendant .

DECISION & JUDGMENT/

Macdonald & Bostwick
orneyspor defendant.

State of New York,

County and City of New York.

above named being duly sworn,

says that lie is

in the above entitled action, and has read and knows the contents of the foregoing
that the same is true to h own knowledge
except as to the matters therein stated to be alleged on infonnation and belief and as
to those matters he believes it to be true.

Sworn to before me this
day of 191

On the 4th flay of May, 1910 tho above named, plain¬
tiffs appeared by their attorney, James W&lsh by Seldon
Bacon of oounsol and tho defendant by hia attorney Louis
B. Rasbrouok ana by Austen G. Pox and Dwight Macdonald of
nounsel at a Special Term, Part XV. of this Court.

Tho action waB tried upon the complaint and amend¬
ed answer of tho above named parties on the said 4th day
of May, 1910 and tho 5th and 6th days Of May, 1910. The
plaintiffs produced thoir witnesses,, documentary ovi donee
and oral testimony, and tho defendant produced his witnesses
documentary evidence and oral testimony.

After having hoard oral argument, and having road
tho briefs submitted by counsel, and after having duly con¬
sidered tho pleadings, documentary evidence and oral testi¬
mony,. I direct Judgment; in favor of tho defendant aid make
the following findings of fact and conclusions of law.

FIHDIHG3 OV PACT .

1. That prior to and in or about November, 1899
the plaintiff White wan in the employ of tho Edison Manufac¬
turing Company as tho manager of tho Film and Kinotosoopo
Department, and ao suoh had oharge of tho selootion of the

subjects for pictures to be made for that Company.

2. That prior to and in or about November, 1899
the plaintiff Soharmorhorn was in the employ of the Kdioon
Manufacturing Company aa Aaoistant General Manager , and as
sudi, had charge of the discounts and credits to be allowed
the customers of the Company and as to which his deoinion wa r
final.

3. That on said date and for a long timo prior
thereto and during the entire o ourso of thoir allogod rela¬
tions with the defendant Vinters, os hereinafter sot forth,
the plaintiffs owed to their employer, the Edison Manufac¬
turing Company, their exclusive services, ana allegiance.

4. Shat prior to and during November, 1899, the
defendant Voters won engaged in the business of dealing in
kinotoscopoR and exhibiting kineto scope pictures.

5. That in or about November, 1899, while em¬
ployed by the Edison Manufacturing Company, the plaintiffs
entered into an arrangoment with the defendant as a result
of which the plaintiff. White, es tho manager of the Film
and Einetoscope Department of the Edison Manufacturing Com-)
pony, agreed to soleot such subjects for the Edison pirn-
tires as would tend to increase the bxisiness of tho defen¬
dant Waters, and suit the special customers of the defendant
Water s, and the plointiff, Sohermerhorn , as Assistant Gen¬
eral Manager of the Edison Manufacturing Company agreed to
give preferential discounts and credits to the defendant.
Waters.

6. That the defendant Waters was to ao business
under the name of tho Kinetograph Company,

7. That under and pursuant to suoh arrangement
the defendant on or about tho 8th day of May, 1900 paid to
tho plaintiff, sohormerhorn, tho nunnof §177.71 and that
prior to and including the 30th day of January, 1903, paid

Folio 7

to the plaintiff, White . tho sum of $1817.81, and that bo-
tween the 8th day of Kay, 1900 and tho lath day of March,
190.S, paid to tho plaintiff Sohermerliorn tho mim of $1817.2:

8. That Bitch payments were made by tho defend¬
ant to tho plaintiffs while tho plaintiffs yjore in tho em¬
ploy of tho I'd is on Manufacturing Company, pretending and
professing to discharge their duties as employoon of tho
Edison Mnnnfaoturing Company as sot forth in paragraphs 1,

2 and 3, m consideration of tho promiaen of tho plaintiffs
to conduct a part of their employer's business in the in¬
terest of the defendant.

9. Chat tho plaintiffs at no time over had any
part in the active raenegcaont of tho business known as the
iiinetograph Company, or of tho business conducted by said
defendant, nor exorcised any control or authority over the
conduct of said husinoos.

10. That the defendant exclusively end solely
managed and conducted said business.

11. Shat bt ho arrangement aa sot forth between
the plaintiffs and the defendant was an agreement on the
part of the defendant to poy the plaintiffs a share of hiB
profits arising out of tho huslnenn oorried on under the
name of the Xinetograph Company, or the business so con¬
ducted by him as aforesaid, in o onsiderati on of the plain¬
tiffs conductdiflg a part of their employer's business in tho
interest of the defendant.

12. That tho plaintiffs entered into their re¬
lations with tho d efendantnwithout the knowledge or oon-
sont of their employer tho Kdiaon Manufacturing Company.

IS. That the plaintiffs did not have the consent
of Thomas#. Edison, the President or of William £. Gilmore
tho Vice-President end General Manager of the Edison Manu¬
facturing Company, to enter into any business relations with

i - '

Polio 10

tho defendant .

14. That neither said Thomao A. Edition nor said
‘‘illlnm E. Gilmore had knowledge of the arrangement be¬
tween tho plaint if fa and tho defendant snd tho fact of Raid
arrangement so entered into was concealed by the plaintiffs
from tho Edition Mnnuf acturlng Company, Thomas A. Edison,

Its Pro aidant and William E. Gilmore, its Vice-President
and General Manager, and from the .nubile.

16. That tho plaintiffs ' ovidonoo aa to their
connection with the Rdloon Manufacturing Company at the
timoof making their arrangement with tho defendant brought
up the issue of the illegatlity of their contract and arose
in the plalntiffa’ evidence glvon in aupport of the allega¬
tions of the oomplaint.

16. That the amounts of the dealers' discounts
which wore eo directod to be ollowod v.-ere long before fixed
and established and wero not determined by the plaintiffs
or either of then.

17. That neither of the plaintiffs had any part
in fix^ing tho prices at which the goods of the Edison Manu¬
facturing Company were to bo sold.

18. That tho plaintiffs were aware of tho noo-
eosity for filing in the office of tho County Clerk of Ilew
*ork County as required by law, the true nemos and addreosaB
of tho owners of tho business conducted in tho City of Hew
York since on or about December, 1899 under tho trade name
Klneto graph Company

19. That the plaintiffs took no ateps to hovo
any oertificata prepared and filed in the office of tho Coun
ty Cl&r^for Dew York County giving the true namo s and ad¬
dresses of the owners of tho buninena conducted in tho City
of Dew York oinoo on or about Dooonber, 1899, under the
trade name Kinetogrsph Company and that no mioh certificate

_J.. _

-4-

Folio IS stating the said plaintiffs were owners or pert owners of
the Kinetpgraph Company was ever so filed.

COTICLUSIONS OF LAY*.

1. Shut the arrangement as above net forth won
in violation of the duty and incompatible with tho fidelity
which the plaintiffs owed to their employer the Bdison
ilanuf actnring Company, wan voia as against public polioy
and will not be enforced by a court of equity.

2. That it vao not nooensary for the defendant
to plead in his answer the illegality of tho arrangement

14 which was entered into between the plaintiffs and tho defen¬
dant, for tho ovidonco which showed the illegality of.
the arrangenont appeared from the testimony of tho plain¬
tiffs.

3. Shat the agreemont hotwoon the plaintiffs
and the defendant was that the plaintiffs Should havo a
share of tho profits of tho business conducted bybthe defen¬
dant in consideration of thoir conducting a part of their
employers ' business in the -Interest of the defendant.

4. fhat judgment be directed to dismiss the com¬
plaint upon the merits.

^atod, How Vorfc, Juno 16th, 1910.

VERHOH M. DAVIS,

.T. S. C.

At a Special Tern, Part IV i
Of the Supreme Court of the _1
State of Hew York hold in and
for the County of Hew York at
the County Biffurt House In said
County on the 16th day of .Tone,
1910.

P H ?, S ?, 11 f ;

hot;, verrok m. pa vis.

JUST ICR.

JAMES H. '-VHIT.E ana JOHI? R. 8CHERMRB-
HORTI,

Plaintiffs,

-against -

PKBCIVAL 1. WATERS,

Defendant .

The issues in this action having heen regularly
brought on for trial before Mr. Juntice Vernon M. Davis-at a
Special Term, Part IV. of this Court held on the 4th, 5th ana
6th days of May, 1910 at the County Court House in the City
of Hew York, Borough of Manhattan, and the Court having hoard
the allegations and proof of the parti ea and tho argument of
counsel and after due deliberation, having duly made and file i
a deoisiSin in favor of the defendant and against the plaintif.
containing a statement of tho findings of fact end conclu¬
sions of lav; thoroonndiroct od judgment bb hereinafter stated.

HOW OH MOTIOH OP I0UIS B. HA8BR0UCK, Esq. , attor¬
ney for defendant, it is

ORDERED AHD ADJUDGED that tho complaint of the
plaintiffs ho and the same is hereby dismissed upon the
merits without costs to cither party aB against the othor.

SHI E R

‘ V. M. D. ,

vm. V. SCHHEtDER, J. S. 0.

Clerk.

Pol. 1.

(/rvl

SUPREME COURT,

NEW YORK COUNTY.

JAMES H. WHITE and JOHN R. S CHEHMERHORN ,

Plaintiffs,

-against-

PERCIVA1 L. WATERS,

Defendant. ;

. .

STATE OP NEW YORK, )

COUNTY OP NEW YORK,)88’

ALEXANDER Ti MOORE, being first duly sworn, de-
S poses and says!

That he is fifty-two years of age and that he
resides at No. 135 West 64th Street, New York City.

That about the 1st of March, 1904, deponent was
employed as Manager of the Kinetograph Department of the
Edison Manufacturing Company, of Orange, New Jersey, and held
such position from that time until March 1st, 1909.

Deponent was employed in that position originally,
by William E. Gilmore, who was a witness in the above entit¬
led cause, and who, at the time of deponent's employment,
was Vice-President and General Manager of the Edison Manu-
3 facturing Company.

Deponent applied for the position of Manager of
the Kinetograph Department to said Gilmore several weeks
prior to March 1st, 1904, to deponent's best recollection
some time in January, 1904. Before deponent was employed
by said Gilmore, the said Gilmore sent deponent over to see
the defendant Percival 1. Waters, saying that Waters knew
all about the Kinetograph business. At that time I knew

nothing of the moving picture business. hut I went and saw
V/aters and discussed with him my general business experience.
After that I went hack to see Mr. Gilmore ahout securing the
position and was put off hy him with the statement that he
had not yet had an opportunity to see Mr. Waters ahout me.

X think he put me off in this way twice. At a subsequent
interview, following these statements, he employed me for
the Edison Manufacturing Company.

Previous to this application in January, 1904, I
had known Mr. Gilmore personally for eighteen or nineteen
years and had been employed hy various Edison Electric light
Companies hy which Gi&more also had been employed.

After I was employed in the position of Manager
of the Kinetograph Department, Mr. Waters frequently came
to me demanding various concessions and favors in the opera¬
tion of that department, such as, that I should drop other
work which was paying the Edison Company full rates to
take special pictures for him at the lower rates which were
accorded to him. After a time his requests became quite
burdensome to the business and I declined to accede to some
and early in the year 1906, as X remember the date, he came
to me one day and insisted that I should send a particular
photographer named Porter, who waB the best photographer
we had, to New Hampshire at once to take a special photograpl
for him of an automobile hill climging contest, which he
wanted to furnish to the Keith and Proctor Theatres. I told
him I could not well send Mr. Porter at that time as he was
busy in the middle of regular other work. Waters became very
insistent and finally said to me that he could get anything

-2-

he wanted in the way ofpersonal favors connected with the
Kinetograph Department of the Edison Manufacturing Company
hy going over my head to Gilmore and that I knew it. He said
he could go right ovBr my head. I told him to go aB quick
as he pleased and left him and went immediately to see Mr.
Gilmore and told him that Waters had said that and Gilmore
said "Did Waters say that?" I said "Yes", and that either
Waters could run the business or I could, and that 1 did not
propose to have him "running my Department for me." Mr.
Gilmore said that he was very much annoyed that Mr. Waters
and I had come to a clash and said a number of things to
smooth me down, and finally said: "Any favorB you do for

V/aters in this business are the same thing as though you
did them for me." The conversation closed there. I did
not send Mr. Porter but sent another photographer, to take
the hill climbing contest, who could be better spared
from the general business.

Deponent further says that deponent's management
of the Kinetograph Department was not interferred with
by Mr. Gilmore except in particulars relating to the businesi
transactions of the Department with the Kinetograph Company,
that the only acts of Mr. Gilmore affecting specifically
the conduct of the business of the Kinetograph Department
were done in either one of two ways; either Mr. Gilmore would
do the act himself, sometimes advising deponent promptly
thereof and sometimes not, or said Gilmore, without condult-
ing this deponent as to the advisability of the steps, would
direct deponent to grant specific concessions to Mr. Waters,
Among the instances of this character, which deponent
specifically remembers, are the following:

The Edison Company had rented the top full floor

-3-

of the building at 41 East 21st Street, New York City, and
also a studio located on the roof of that building, which
was about nine-tenths the size of the full floor just below,
which it rented. Eor this complete floor and the studio on
the roof, the Edison Company paid One hundred and fifty
($150.) Dollars a month rent. At first, Mr. Waters occupied
practically the full front half of this top floor; after
a while, he wanted more space. This was about 1906, and Mr.
Gilmore, in my presence, rented the full floor to Waters for
Eorty ($40.) Dollars a month, with the exception of a small
dark room, which was little more than a closet, about seven
or eight feet square, which was used as a test room. Depon¬
ent protested to Mr. Gilmore against letting this property
at that price to Mr. Waters and tried to secure a larger
rental from him, becajise the other floors in the building
v/ere rented at prices as high as Twelve Hundred ($1200)
Dollars a year, or higher; the other floors being of the
same value v/ith this top floor.

Deponent was over-ruled in this by Mr. Gilmore, who,
in deponent's presence, arranged with Mr. v/aters that he
should have this entire floor, with the exception of the
dark room, for Eorty ($40.) Dollars a month. The dimensions
of this top floor were about twenty feet by ninety feet.

At the time these premises were so rented to
Waters by Mr. Gilmore, part of this top floor, so rented to
V/aters, was greatly needed by the Kinetograph Department
in the operation of the Studio on the roof. The actors,
for the taking of the films, were, by the renting of all this
room to Mr. Waters, deprived of any place to dress except
the toilet room, or the dark closet already mentioned, and
this was a serious handicap in the operation of the studio.

-4-

X raised that objection to Mr. Gilmore before he made the
arrangement with Waters but he over-ruled it.

In the business of exhibiting moving pictures, for
what is called the first run, which is the privilege of ex¬
hibiting the pictures when they are first put on the mar¬
ket for a period which ordinarily lasted about a week, a
special rental was paid by the exhibitor.

The Kine.togigaph Company was engaged in the business
of renting films and was in the business of exhibiting them
themselves. For the first run, during a period of a week or
so, exhibitors would pay a rental of approximately twice
to three times the ordinary rental for later periods. This
was true, not only of the product of the Edison Company,
but of the similar products of other film!- companies, and
was a familiar feature of the film exhibiting business.

From the time I took the office of Manager of the
Eilm Department, Mr. Water's occupancy of the top floor of
41 East 21st Street gave him the opportunity of observing
what pictures we were getting out, before the positive . films
were actually developed. Our facilities for developing posi¬
tives' were, at that time, limited so that we could not get
out many positives at a time.

Very frequently, during the first two years, Mr.
Gilmore would call me up on the telephone and say "How many
positives have you ready" of such and such a film, which
had just been completed? I would answer such and such a
number, say five or six, and they are going to our Chicago
agent, for instance. Mr. Gilmore would say "Give those to
Waters", and, of course, I had to obey that direction and
Mr. Waters would get thOBe films. This would be repeated wit]

-5-

regard to such film if it apparently was particularly de¬
sirable, two or three times before I was able to ship any
films to the Chicago agent, or to any other agent of the
Company, so that on these films Mr. Waters would have the
first run, without paying any special price therefor, for a
period of from one to three weeks, owing to the restricted
capacity of preparing positives.

After a time, and, according to my best recollection
about the early part of the year 1906, Mr. Gilmore gave me
specific orders to give Mr. waters two weeks leeway on all
general pictures taken, withholding them from any other
customers for two weeks. Of course, I had to obey these
instructions; but, after a while, on my own responsibility,

I cut down the period from two weeks to about ten days. This
was done toward the close of Mr. Gilmore's administration,
which ended in 1908.

During the latter part of 1906, or the early part
of 1907, X secured a contract for the Edison Manufacturing
Company with the Pittsburg Calcium Light Company, of Pitts¬
burg, Pennsylvania, for ten prints of each Edison general
film at eleven cents a foot, and this contract went into
full operation.

After a short time, by direction of Mr. Gilmore,
these films for the Pittsburg Calcium Light Company were de¬
livered to Mr. Waters at nine cents a foot, and he sold them
to the Pittsburg Calcium Light Company at ten cents a foot,
resulting in a net loss to the Edison Manufacturing Company
of two cents a foot and a gain to the Kinetograph Compan#
of one cent a foot. These films, by Mr. Gilmore's instruc¬
tions, were delivered directly to Mr. Waters, or possibly,
on rare occasions, shipped direct and charged 'to Mr. Waters.

-6-

During the- meeting of the Film Service Association
at Pittsburg, in the year 1907, as I was informed by Eugene
Cline, who was present at that meeting, the manager of the
Pittsburg Calcium light company showed to him, and to several
of the film people attending that convention, the offices
of the Pittsburg Calcium Light Company and incidentally
ten copies of a film entitled "A race for a Million".

None of the visitors, Mr. Cline told me, had ever seen
the film, or knew that the picture was out, and I believe
the information so given me by Mr. Cline. This Mr. Cline
was in the film renting business in Chicago.

Shortly afterwards, he wrote me a letter calling
attention to this occurrence, saying that the film was not
yet out, and we had furnished it in this way to the Pittsburg
Company ahead of our other customers, of whom he was one,
and that, if he was to be accorded that kind of treatment,
he would cease business relations with the Edison Manufac¬
turing Company.

Deponent called this to Mr. Gilmore's attention
and also several similar instances at different times and
the result was merely a reiteration of the orders previously
given.

The orders given by Mr. Gilmore about giving Waters
two weeks leeway on all pictures, not only resulted in my
furnishing him the pictures two weeks ahead but forbade
my advertising the film, or publishing the fact that we had
such a film until the expiration of that two weeks, and
extended so far as to forbid me furnishing our Chicago agents „
or agents in the far West, with any copies, or information
concerning the films until the expiration of the leeway.

-7-

-v

Not only did Waters pay nothing for this privilege,
but no one else has a low prices as those given to Waters
by Mr. Gilmore during this period* This applied not only
to films but to all apparatus handled by the Department.

Deponent further says that the Kinetograph Company
was, during the years 1905, 1906, 1907 and 1908, known as
the New York Selling Agent, of the Kinetograph Department
of the Edison Manufacturing Company, and in the same way
the ICleine Optical Company was known as its Chicago Selling
Agent .

The Kinetograph Company, to deponent's knowledge,
repeatedly purchased both films and apparatus manufactured
by other concerns than the Edison Manufacturing Company,
who were close competitors of the Edison Manufacturing
Company in the Kinetograph business. Among such concerns
were Pathe Ereres, the Vitagraph Company of America, S.

Lubin of Philadelphia, the Biograph Company and the Nicholas
Powers Moving Picture Machine Company of New York. Deponent
called this fact to the attention of Mr. Gilmore but was
told to do nothing about it. This was, as I remember the
date, in 1904.

During the year 1904, the Kleine Optical Company
of Chicago bought from the representative of Pathe Ereres,
of Paris, Erance, a small amount of film, about twenty to
twenty five films, A similar amount was also purchased
from the same company by Mr. Waters, which I mentioned to
Mr. Gilmore. Mr. Gilmore immediately cancdlled all arrange¬
ments with the Kleine Optical on the stated ground of their
purchase from Pathe Erere3 and the Kleine Optical Company
was cut off from representing the Edison Company, aB its
selling agent in Chicago. Before we had secured any

one else as a selling agent there,, one day Mr. Gilmore,

Mr. Waters and myself met in Hew York, either at Martin's
restaurant on Fifth Avenue and 26th Street, or at the Fifth
Avenue Hotel, on Fifth Avenue and 23rd Street, and the
matter of a selling agency at Chicaho was brought up. Mr.
Gilmore said he wanted Waters to go out there and open an
office and take the agency. Mr. Waters answered that he
did not want to go out there himself, so far from New York,
and he did not have anybody he could put in charge of the
business there.

X said, off-hand and somewhat jestingly, what was
the matter with my going out there for Waters and talcing an
interest in the business. Gilmore said "Well, why don't
you?", and X said "I have not got the money to put in
to run the business." Gilmore said, "We will furnish you
the money." There was some further talk about it, which
I do not exactly recollect, but it came to nothing.

Very shortly after, however, a branch office of the
Edison Manufacturing Company was opened in Chicago, and Mr.
Ernest A. Fenton, who ( was a witness in this case, was put
in charge of it. Fent.bn was a half brother of Mr. Waters.

He remainder in charge of the Chicago office for about a
year.

Mr. Waters, in spite of the establishment of a
branch office of the Edison Manufacturing Company at
Chicago, received the films some ten days to two weeks in
advance of the Chicago office of the Company and exhibited,
or had exhibited, such films in Chicago theatres before the
Chicago office of the Company was supplied with such films,
thus depriving other exhibitors and customers of the Edison

Company for the benefits of the first run, and depriving
the Company of the opportunity of selling films to itB
other customers for such first runs.

This situation largely interfered with the
deponent's soliciting business from other film exhibitors,
or other concerns renting films, and resulted in loss
of business to the Edison Manufacturing Company. This
situation was repeatedly presented to Mr. Gilmore by depo¬
nent without avail, and the orders to give Waters the two
weeks precedence reiterated.

After the retirement of Mr. Gilmore from the
position of Vice-President and General Manager of the
Edison Manufacturing Company, the matter of these privi¬
leges accorded Mr. iya;ters was taken up by the new acting
head of the Company, Mr. Prank L. Dyer, and most of these
special privileges to Mr. Waters were promptly cut off.

Deponent further says that at the time the
Kinetograph Company was purchasing films and apparatus from
outside firms, such as the Vitagraph Company and the Bio¬
graph Company, deponent called the attentinn of Mr. Gil¬
more to the matter that the Edison Manufacturing Company
was prosecuting these companies for infringement of its
patents on such apparatus (and subsequently such apparatus
was held to be an infringement' of the Edison patents) but
the Kinetograph Company was so permitted by Mr. Gilmore to
purchase films and apparatus from these companies in spite
of that litigation.

At the end of the year 1907, in addition to all
special rebates and lower prices given Mr. WaterB, by the
arrangements made with the Company, Mr. Gilmore awarded him

-10-

a special rebate on the purchase by him of films, during the;

I preceding year, of approximately Three Thousand (3,000)
Dollars, which rebate waB not called for by any arrangement
in existence with Mr. Waters. Deponent knows of no reason
beneficial to the Edison Manufacturing Company why any
such rebate shoul'd have been granted to Mr. i, raters on
business already done. This was done by Mr. C-ilmore's
express orders without any consultation with deponent,
and without deponent's knowledge of its being done until
the matter had been placed upon the books.

Deponent further says that some time during the
year 1907 in Hew York City, when’ deponent and said Gilmore
were spending an evening together, said Gilmore told the
deponent in termB that he had a financial interest in the
business of the defendant Waters. Deponent answered
"What do you think? Don't you think I know anything?''

Subscribed and sworn to

Alexander T. Moore

before me this 13th day
of May, 1912.

(Hot

tial-
al).

Theo. F. Sanders,

Hotary Public .Kings County,
Certificate filed in Hew York County.

Fol.l

SUPREME COURT
MEW. YORK COUNTY.

JAMES H. WHITE and JOHN R. SCHERMBRHORN,
Plaintiffs,

I -against-

| PERCIVA1 L. WATERS,

Defendant.

STATE OE NEW YORK, :

! ss . :

COUNTY OP HEW YORK :

| JAMES H. WHITE, being first duly sworn, deposes

2 and says:

That he is one of the above named plaintiffs,
and that he has read the annexed affidavits of Alexander
T. Moore, Richard J. Poard, Frederick R. Hasselman and
Arthur S. Cox.

Deponent further says that , ever since the
trial of this action, he has been seeking for evidence
that would establish that the testimony given by William
E. Gilmore on the trial of this action was untrue, and
deponent first heard of the statements now made by said
Poard, Hasselman and Cox on or about the 1st day of April
1912.

3 Deponent further says that he was advised by

Mr. Selden Bacon, his counsel in this case, that it would
be necessary, in moving for a new trial, to find not only
evidence of the uunrtruth of the testimony given by said
William E. Gilmore upon the trial but also evidence that that
testimony had been given to the Court, on behalf of the
defendant, with knowledge on the part of the defendant that;
the witness Gilmore was giving false testimony; and depo-

seeking

nent has 'been/ for nearly two yearsto find evidence that
the defendant Y/aters knew the falsity of the testimony of
said Gilmore at the time it was given, and deponent has
been dilogen.tly making inquiries in all directions where
he thought it possible that he would find such evidence.

He finally discovered on or about the 25th day of April,
1912, that Mr. Alexander T. Moore, who was Manager of the
Kinetograph Department of the Edison Manufacturing Company
from March 1904 to March 1909, had had various conversations
with the defendant and with said Gilmore bearing on the
question of Gilmore's interest with V/aters, the substance:
of which iB now shown in the affidavit of said Alexander
Moore hereto annexed.

That thereupon deponent sought to secure an
affidavit from said Moore but until the 11th day of May,
1912, deponent was unable to get even any detailed state¬
ment from said Moore of what evidence he could give; the
detailed statement of said Moore waB finally secured on the
11th day of May, 1912, and reduced to writing, and verified,
as shown by the annexed affidavit, on the 13th day of May,
1912, which was the earliest date at which deponent could
procure the affidavit of said Moore.

During all the time since the original trial
of this action deponent has been consulting at frequent
intervals with the other plaintiff John R. Schermerhorn
with regard to similar efforts made by him to secure the
necessary testimony on which to base an application for a
hew trial, and both said Schermerhorn and deponent have
been making constant efforts to secure the evidence which
they have now. finally obtained, and which it was impossible
for them to obtain until this time.

-2-

Deponent further says that he reiterates his tes¬
timony given on the trial of this cause as to his obtain¬
ing permission from William E. Gilmore, as General Manager,
and Vice-President of the Edison Manufacturing Company to
go into business with the defendant Waters along with the
plaintiff Schermerhorn, and also reiterates his denial of
the testimony of said Gilmore that he called in this depo¬
nent and asked him if he had heard anything about rumors
that some of the employees of the Edison Manufacturing Comp my
were connected with Mr. yraters in the ICinetograph Company
business; and deponent also reiterates his denial that this
deponent had denied to said Gilmore his having such con¬
nection, and deponent reiterates as well his other testi-
. mony at the trial.

Deponent further says that he did not know
at the time of the trial of this cause that said Moore
could give any such testimony as is shown by his said
affidavit. And the first suggestion deponent received tha ;
said Moore could have given testimony concerning any of
the matters referred to in his said affidavit was received
by deponent from one A. C. Abadie about the 20th of April,
1912; after that deponent had considerable difficulty in
finding said Moore, who had moved several times, but depo-
ment finally found him about April 25th, 1912, and made re¬
peated efforts to get him to tell deponent what he knew,
deponent going to his (Moore's) house seven or eight times
between April 25th, 1912, and May 11th, 1912, and finally
succeeded in eliciting the facts from him only on May 11th,
1912. •

-3-

The evidence of said Poard, said Hasselman, and
Baid Cox could not, of course, have been produced at the
trial.

Subscribed and sworn to Jas.H.Y/hite

before me this 13th day of May, 1921

(Notari

Seal )

James C. Kellogg ,

Notary Public 103

New York County

SUPREME COURT
HEW YORK COUNTY

- - — - -x

JAMES H. WHITE and JOHN R. SCHERMERHORN , ’ :

Plaintiffs, :

-against- :

PERCIVAL L. WATERS, • i

Defendant. :

STATE OP FEW YORK :

: ss.:

COUNTY OP FEW YORK :

first

JOHN R. SCHERMERHORH, being/duly sworn, deposes
and says:

That he is one of the above named plaintiffs, and
that he has read the annexed affidavits of Alexander: T.
Moore, Richard J. Poard, Prederick R. Hasselman and Arthur
S. Cox.

Deponent further says that ever since the trial-
of this action he has been seeking for evidence that wouldi
establish that the testimony given by William E. Gilmore
on the trial of this action was untrue, and for evidence
that the defendant Waters, at the time of the giving of
such testimony by said William E. Gilmore, knew that the
same was untrue.

Depopent long sought vainly for any evidence out¬
side of his own testimony and that of Kir. White on the
trial of this action of the untruth of the testimony of Mr.
Gilmore, though exercising every effort.

Deponent finally learned after the 1st of
January, 1912, from Messrs. Poard, Cox and Hasselman that

Mr. V/illiam E. Gilmore had made some very peculiar state¬
ments to them concerning his testimony on the trial of the
above entitled action. It was sometime after that before
deponent could secure from any one of the three an exact
statement as to what these statements were, and it was not
until about, the 20th day of March, 1912, that deponent was
able to get from any one of them any exact statement of
what it was that said Gilmore had said.

Deponent then promptly brought them to the office
of deponent's attorney in this case where their affidavits
were taken one after another. Deponent, of course, at
the time of the trial could know nothing' of the testimony
that could be given by these three gentlemen.

After deponent had ascertained that Messrs. Cox,
Foard and Hasselman could give evidence that the testimony
given by Mr. Gilmore at the trial was untrue, deponent
was advisdd by his counsel herein, Mr. Selden Bacon, whose
office is at 49 Y/all Street, Hew York, and who resides
in the Town of Mt. Pleasant, V/estchester County, Hew York,
that he must, in addition to any statements that Messrs.
Cox, Foard and Hasselman could make , Becure evidence that
Mr. Waters knew that Mr. Gilmore was'giving false testi¬
mony in the case.

Deponent had- already been making efforts to secure
evidence as to Mr. waters’ knowledge but had up to that
time been unable to find any.

Deponent has during the preceding two years
communicated frequently with his co-plaintiff White and
both dpponent and his said co-plaintiff had searched
every where they thought it likely that they could obtain

testimony to that effect without avail.

During the month of April, 1912, Mr. White
informed deponent that he had heard that Mr. Alexander T.
Moore oould probably give some evidence, and deponent has
been engaged up to the 11th of May, 1912, with said Whitem
in trying to find said Moo.re and secure his affidavit.

Deponent was entirely ignorant at the time of
the trial of this cause, and thereafter until informed by
said White , late in April, 1912, that said Alexander T,

Moore could give any evidence relating to any question aris¬
ing in the case .

Deponent did not see the said Moore after the
year 1907 or 1908 until the 11th day of May, 1912, to have
any conversation with him, and on the occasion of deponent's
meeting him on the 11th of May, 1912, by previous arrange¬
ment made through Mr. White, said Moore gave the statement
shown in his annexed affidavit.

Deponent further says that since the trial
of this case, which occurred in the month of May, 1910,
deponent has been in conference-, with his attorney Mr .Bacon
feery many times with regard to the possibilities of a way
to find such testimony affecting said Y/aters and said
Gilmore and what possible avenues there v/ere of finding such
testimony. With the exception of the summer and early
fall of 1911, during which time Mr. Bacon was almost con¬
tinuously absent from his office, there has scarcely been
a single month when deponent has not conferred with said
Selden Bacon over possible avenues of finding. the testimony.

Deponent further says that he reiterates hiB
testimony given on the trial of this cause as to his ob¬
taining permission from Y/illiam E. Gilmore; as General Mana-

-3-

ager and Vice-President of the Edison Manufacturing Company
to go into business with the defendant Waters along with the-
plaintiff White and also reiterates his denial of the
testimony of said Gilmore that he called in this deponent
and asked him if he had heard anything about rumors that
some of the employees of the Edison Manufacturing Company
were connected with Mr. waters in the Kinetograph Company
business, and deponent also reiterates his denial that
this deponent had denied to said Gilmore his having such
connection, and deponent reiterates as well his other
testimony at the trial.

Deponent's first suggestion that said Moore could
give any such testimony, as is contained in his annexed
affidavit, came from Mr. James H. White.

Subscribed amd sworn to before
me this 13th day of May, 1912.

John R. Schermerhorn,

Arthur Watson,

Notary Public Rockland Co.,

Cert, filed in New York Co., No. 32

(Notarial

Seal).

SUPREME COURT,
HBf YORK COUNTY.

JAMES. H. WHITE and JOHN R. SCHERMERHORN,
Plaintiffs, :
-against- :

PERCIVAL I. WATERS,

Defendant.

STATE OP HEW YORK'- )

:ss:

COUNTY OP NEW YORK, )

SELDEN BACON, Being first duly sworn, deposes
and say b!

That he is the attorney for the above named plain¬
tiffs in the above entitled action.

That this action was begun on the 29th day of
January, 1909, and the complaint was served on the defendant
on that day. The answer to the complaint was .served
on the 6th day of March, 1909, and thereafter, by stipula¬
tion, an amended answer was served on the 7th day of March,
1910.

Deponent further says that he was retained as
counsel iii the case along with the original attorney James
E. Walsh about the time of the commencement of the action,
and that said James I. Walsh died thereafte , to wit, on
December 26th, 1910, and on January 11th, 1911, deponent
appeared as attorney for plaintiffs in lieu of said James
E.Walsh, deceased.

The action was tried before Hon. Vernon M.Davis,
a Justice of this Court, without a jury, on the 4th, 5th,
and 6th days of May, 1910, deponent appearing as trial coun¬
sel for plaintiffs.

That thereafter, and on the 27th day of May, 1910,
Justice Davis filed his opinion in the case, a copy of
which appears in the record pn appeal herein, and thereaf¬
ter, and on the 17th day of June, 1910, judgment was enter¬
ed in this Court dismissing the complaint*

Thereafter, and on or about the 14th day of July,
1910, an appeal from the said judgment was taken to the
Appellate Division for the First Department and thereafter
a full case, containing all Ithe evidence and proceedings
had upon the trial was duly settled by order of Justice
Davis, to wit, on or about the 11th day of January, 1911,
and on that day an order was entered directing that the
printed record on appeal be filed in the Appellate Divi¬
sion. That after the appeal was there heard, to wit, on
the day of June, 1911, the judgment was affirmed by

the Appellate Division without opinion.

Deponent further Bays that ever since the trial
in May|5.910, the plaintiffs have been consulting with
deponent as to the possibility of finding additional evi¬
dence disproving the testimony oft'William E. Gilmore, that
said Gilmore did not give his assent to their entering into
business with the defendant V/aters in the Kinetograph
Company and his testimony that he had never had any business
relations in the way of being interested in business with
the defendant Waters directly or indirectly.

Plaintiffs have repeatedly consulted with deponent
as to possibilities of tracing out evidence, and, since
May, 1910, to deponent's best recollection, not a single
month has passed in which one or the other of plaintiffs
has not consulted deponent, either personally or by letter,
concerning the! matter of finding such testimony.

7 I That the procuring of outside evidence concerning

(transactions claimed to have passed exclusively between
said Gilmore and these plaintiffs waB naturally a matter of
extfeme difficulty,, and any evidence was necessarily of
: such a character, and to be derived from such sources, that
the plaintiffs had no specific data to enable them to go to
any particular place to find such testimony, or seek out
I any particular persons.

In the same way,' any evidence that the defendant,
in offering the testimony of said Gilmore, was knowingly
offering untrue testimony, was extremely difficult to pro¬
cure, and has finally been procured only by careful inquiry
8 in numerous directions.

Deponent further says that this suit waB.-brought
by the plaintiffs for the dissolution of the alleged part¬
nership between the plaintiffs and defendant and for an
accounting from the defendant. That in the opinion signed
by Justice Davis, he says:

"I find that there was a partnership ex¬
isting between the parties. But whether the plain-
"tiffs are in a position to entitle them to the in¬
tervention of a Court of equity to decree an account¬
ing is another question. They entered into this busi-
"ness relation with the defendant without the knowl¬
edge or consent of their employer, the Edison Company.
"They claim that the General Manager, Gilmore J gave his
"assent, but the fatter denies this, and his denial
"is more weighty as evidence than the testimony of the
"interested plaintiffs on this point. Moreover, Mr.

9 ] "Gilmore says not only that he gave no consent, but

"that the plaintiffs, assured him that they had no con-,
"nection with the business carried on by the defendant
"Waters, and other witnesses testify to a similar de¬
claration by the plaintiff White - - - .

" The contract^ sued upon, when reduced to its

"simplest terms, amounts to an agreement on the part
"of the defendant to pay the plaintiffs a share of
"his profits in consideration of their conducting a
"part of their employer's business in his (Waters)
"interest. Such a contract; is incompatible with the
fidelity which the plaintiffs owed to their employer's
"interest, is against the public policy, and cannot be
"enforced in a Court of Equity."

10 The plaintiffs, as deponent understands the case,
were defeated BOlely because of the testimony of the de¬
fendant Gilmore that neither White nor Schermerhorn ever
ashed him such a question as whether he had any objection
to their entering into business relations with Mr. Waters -
and that he absolutely did not say to either one of them,
directly or indirectly, that either he or Mr. Edison had
no objectionvto either of them making such an arrangement
with Mr. Waters; that he never said that he objected to

11 their signing articles of partnership because they would
have to be recorded and made public, or anything of that
kind; that he never knew that articles of partnership were
contemplated between plaintiffs and defendant, and his fur¬
ther testimony that he had never had any business relations
in the way of being interested in business with Mr. Persrival
1. Waters, * directly or .indirectly.

.Deponent further dsays that, at the time the tes-^
timony of said Gilmore was given, at the trial of the said
action, the defendant Waters was in the Court room, very
near the witness, and in a position where he could hear

12 every word stated by the witness Gilmore.

That the testimony of said Gilmore that he never
had any business relations in the way of being interested
in business, with the defendant Waters, directly or indirect¬
ly,, was testimony given on his direct examination by the
counsel for the defendant, and. as indicated by the. opinion
of Justice Davis, was the cause of the great weight given
to his testimony as against the direct testimony of the two
plaintiffs, which he disputed.

-4-

Notarial

■ Deponent further says, that annexed hereto, and hereb
made a part of this affidavit, is a copy of the opinion
given by Justice Davis in deciding the case.

Deponent further says that the matters stated
hy Messrs. Kas&elman, Cox, Foard and Moore, in their an¬
nexed affidavits herein, were not known to deponent at the
time of the trial of this cause, and have been subsequently
discovered since the trial of the said cause as a result
of long continued investigations made by the two plaintiffs
under deponent's direction, as stated in their affidavits,
Subscribed and sworn to before me)
this 15th day of May, 1912. j SELDEN BACON.

Florence M, Epworth,

Notary Public Kings County,

Cert, filed in New York County.

,al

LEGAL DEPARTMENT RECORDS
PHONOGRAPH

This material consists of correspondence, court documents, and other
items relating to patent interference proceedings and infringement suits,
contract disputes, and other legal actions involving Edison's phonograph.
Included are items pertaining to the protracted litigation over phonograph sales
rights. Also included are documents dealing with musical copyright, corporate
organization, embezzlement, and the unlicenced use of Edison’s name. Most
of the selected items cover the years 1899-1910, but a few case files begin
during the mid-1 890s and some continue into the 1 91 Os. Approximately half of
the cases relate to litigation involving the National Phonograph Co. or other
Edison interests and the American Graphophone Co. or its associated sales
company, the Columbia Phonograph Co., General. Other cases deal with the
disposition of litigation between Edison and the New York Phonograph Co.; the
supply of Edison phonographs to Europe; patent infringement by Pathe Freres
in France; and Mexican copyright law. In addition, there is a case file containing
information concerning price maintenance litigation pursued by the National
Phonograph Co. and its affiliates.

Less than 1 0 percent of the documents have been selected. The selected
items reflect Edison's personal involvement in legal matters, detail
experimental work done by Edison or his assistants, or broadly pertain to
matters of corporate organization and stratagems employed against
competitors. The documents have been arranged in the following order:

Correspondence

General

Douglas Phonograph Company
Foreign Copyright
Higham, Daniel

Infringement Searches [not selected]

Petit, Ademor N. [not selected]

Trademarks and Trade Names [not selected]

200-Thread Record

Interference Proceedings

Macdonald v. Edison (No. 20,775)

Edison v. Petit v. Capps (No. 22,202); Edison v. Jones (No. 22,203)
Edison v. Smith (No. 25,460)

Edison v. Macdonald (No. 25,677)

Case Files

American Graphophone Company v. National Phonograph Company [2
cases]

American Graphophone Company v. National Phonograph Company
and Blackman Talking Machine Company
American Graphophone Company v. Cleveland Walcuttetal.

Columbia Phonograph Company v. National Phonograph Company and
William J. Rahley, Columbia Phonograph Company v. John E.
Whitson and Walter J. Whitson and the National Phonograph
Company

Thomas A. Edison v. Frederic M. Prescott

Thomas A. Edison et al. v. New York Phonograph Company et al.; New
York Phonograph Company v. Siegel-Cooper Company
Thomas A. Edison, Inc. v. United States Phonograph Company
Edison Phonograph Works v. Edison United Phonograph Company,
Edison United Phonograph Company v. Edison Phonograph
Works

Edison United Phonograph Company v. Thomas A. Edison etal.

Jos6 Elizondo et al. v. Jorge Alcalde

International Graphophone Company v. Thomas A. Edison etal

George Croyden Marks v. Pathd Freres

National Phonograph Company v. American Graphophone Company [2
cases]; New Jersey Patent Company v. American Graphophone
Company

National Phonograph Company v. American Graphophone Company
and Columbia Phonograph Company, General [3 cases]

National Phonograph Company v. Lambert Company
National Phonograph Company v. Lambert Company and Thomas B.
Lambert, Edison Phonograph Company v. Lambert Company and
Thomas B. Lambert

New Jersey Patent Company v. Columbia Phonograph Company,
General

New York Phonograph Company v. National Phonograph Company et
al.

United States of America v. James L. Andem
United States of America on the Relation of National Phonograph
Company v. Frederick I. Allen, Commissioner of Patents
Price Maintenance Cases

General

This folder contains documents relating to corporate consolidation and other matters. The
selected documents coverthe years 1 899, 1 903-1 904, and 1910. Included is correspondence with
Rosanna Batchelor, widow of Edison's former associate, Charles Batchelor, and with Newark
attorney Robert H. McCarter regarding Edison's proposed purchase of Mrs. Batchelor's stock in
Edison Phonograph Works and the feasibility of including the Works in the consolidation. There
are also a list of cases involving the Edison interests and the American Graphophone Co. prior
to December 1896; an enumeration of cases pending and under consideration in August 1910;
and an agreement between the American Graphophone Co. and the National Phonograph Co.
regarding a patent for large-diameter cylinder records.

Douglas Phonograph Company

This folder contains documents relating to the formation of the Douglas Phonograph Co.,
a New York corporation organized as a successor to Douglas & Co. The company was formed in
November 1904 and dealt in Victor talking machines as well as Edison phonographs. It was
controlled by the National Phonograph Co. The selected items cover the years 1904 and 1906.
They consist of a letter from New York attorney Frank E. Bradley to Frank L. Dyer regarding the
reorganization of Douglas & Co; minutes of the first meeting of the incorporators and subscribers
of the Douglas Phonograph Co.; and the president's and treasurer's report for the year ending
October 31, 1906.

Foreign Copyright

This folder contains correspondence and other documents relating to musical copyright
matters in Great Britain, Germany, and other countries. The selected documents coverthe period
1908-1909. Among the correspondents are Paul H. Cromelin and M. Dorian of the Columbia
Phonograph Co. and Horace Pettit of the Victor Talking Machine Co. The documents pertain to
copyright provisions in British law and under the Beme Convention of 1886 and to cooperation
between the National Phonograph Co. and its competitors, Columbia and Victor, on the foreign
copyright issue. Included is a report by M. Dorian prepared for the Berlin Conference for the
Revision of International Copyright Laws in October 1908, as well as a printed copy of Frank L.
Dyer's testimony before the British Parliament.

Higham, Daniel

This folder contains correspondence and other documents relating to Daniel Higham’s
patents on mechanical amplification devices and to Edison's interest in his work. The selected
documents coverthe period 1 902-1 904. Among the correspondents are Higham, Edison, and their
respective patent attorneys, John B. Moran and the firm of Dyer, Edmonds, and Dyer. Included
is an option agreement between Higham's High-Am-O-Phone Co. and the National Phonograph
Co., along with numerous items pertaining to the execution and disposition of the agreement.

Infringement Searches [not selected]

This folder contains correspondence, printed patents, and other documents relating to the
evaluation of non-Edison patents. Included are materials collected in regard to patents by John
F. Barber, John C. English, Charles J. Kintner, Albert K. Keller, Thomas H. Macdonald, and Abner
M. Seeley. Among the patent claims researched by the Legal Department are those pertaining to
nickel-in-the-slot devices, feed mechanisms, celluloid records, a return device, a record box, a
tapering tone arm, and other technical modifications.

Petit, Ademor N. [not selected]

This folder contains correspondence and other documents relating to patents obtained by
Ademor N. Petit and others for improvements in cylinder records. The correspondents include
Petit, Frank L. Dyer of the Legal Department, the United States Patent Office, patent agent
George Croyden Marks, and the attorneys involved in transfem'ng assignment of Petit's patents
from the International Phonograph and Indestructible Record Co., Ltd., to the New Jersey Patent
Co.

Trademarks and Trade Names [not selected]

This folder contains correspondence and other documents relating to the labeling of
phonographs and records and to the use of specific words as trademarks or trade names in the
United States and elsewhere. Included are discussions of the words "amberola," "cygnet,"
"phonograph," "conqueror," "fireside," "home," and "Victor." The correspondents include Frank L.
Dyer and other legal representatives of the National Phonograph Co., as well as representatives
of the American Graphophone Co. and the Victor Talking Machine Co.

200-Thread Record

This folder contains correspondence and other documents relating to Edison's efforts to
obtain American and foreign patents for his 200-thread record, which he manufactured as the
"Amberol" record. The selected documents cover the period 1908-1910. Among the
correspondents are Edison, Frank L. Dyer and Dyer Smith of the Legal Department, inventor
Ademor N. Petit, and British patent agents Marks & Clerk. Included are affidavits by Edison and
Smith regarding the development of the longer-playing record, as well as correspondence
concerning claims by the Premier Manufacturing Co., Ltd., of Great Britain to have made similar
records.

LEGAL DEPARTMENT RECORDS
PHONOGRAPH - CORRESPONDENCE

These folders contain correspondence and other documents relating to
legal matters involving Edison's phonograph. The selected documents cover
the period 1899-19 1 0. Among the correspondents are Edison, Frank L. Dyer,
Herbert H. Dyke, Howard W. Hayes, and other members of Edison's legal staff.
Some material pertains to labeling phonographs and records, particularly to
names or works used as trademarks and trade names. Some items concern
existing patents and their relation to perfected or proposed innovations by
Edison, his employees, orothers. Research subjects include nickel-in-the-slots
devices, modified reproducers, attachments, a feed mechanism, a tapering
tone arm, a return device, and "indestructible" records. The patent holders
include Edison, Thomas H. Macdonald, Ademor N. Petit, and Peter Weber. In
addition, there is material dealing with proposed litigation, along with items that
Were collected in anticipation of legal agreements or disputes. Some of the
documents pertain to the formation of the Douglas Phonograph Co. and to
contracts with sales agents. Other items concern research done on state tax
codes, state laws regarding hawkers and peddlers, the municipal boundaries
of Belleville, New Jersey, and installment sales contracts. Also included are
letters and interoffice communications regarding Daniel Higham's mechanical
amplification patents; the development and sale of celluloid and 200-thread
records; and musical copyright in Great Britain and under the Berne
Convention.

Legal Department Records
Phonograph - Correspondence

General

This folder contains documents relating to corporate consolidation and
other matters. The selected documents cover the years 1 899, 1 903-1 904, and
1910. Included is correspondence with Rosanna Batchelor, widow of Edison's
former associate, Charles Batchelor, and with Newark attorney Robert H.
McCarter regarding Edison's proposed purchase of Mrs. Batchelor's stock in
Edison Phonograph Works and the feasibility of including the Works in the
consolidation. There are also a list of cases involving the Edison interests and
the American Graphophone Co. prior to December 1 896; an enumeration of
cases pending and under consideration in August 1910; and an agreement
between the American Graphophone Co. and the National Phonograph Co.
regarding a patent for large-diameter cylinder records.

Less than 5 percent of the documents have been selected.

[PHOTOCOPY]

Edison Phonograph Works,
Orange, N. j.

Newark, n. j. November 18th. ,1699

Dear Sirs:- - • W

I am in receipt of your favor of the 13th. inst. enclosing
copies of the settlement between the United Phonograph Company and
yourself s and Mr. Edison. it corresponds with my memory of the mat¬

ter, and is in extremely good shape. in my judgment this settlement
will go far toward preventing the Edison United Phonograph company
from ever again bringing suit against the Works for alleged violation
of contract.

The rule of our Court of Chancery i3, that if a bill is dis¬
missed without a provision that the case may be brought up again, it
is a final settlement of the matter, and the complainant must show
very good grounds before he can be relieved of the effect of the set¬
tlement. As you may rememte r, one of the grounds urged by the

American Graphophone Company should not get a preliminary injunction

. _ a

against the United States Phonograph Company, was jjjjjjg similar settle-

ment of the early case against the Company. The proposition struck
the counsel of the American Graphophone Co. with such force that the
motion for the preliminary injunction was withdrawn.

Yours very truly,

LICENSE AGREEMENT .

("GRAPHOPHONE GRAND")

WHEREAS the AMERICAN GRAPHOPHONE COMPANY, a corporation
duly organized under the laws of West Virginia and haring its
principal office in Washington, District of Columbia, (here¬
inafter called the licensor) is the grantee and owner of Let¬
ters Patent No. 714,651, dated November 25, 1902, and known
as the "GRAPHOPHONE GRAND PATENT" , and

WHEREAS the NATIONAL PHONOGRAPH COMPANY, a corporation
organized under the laws of New Jersey and having its prin¬
oipal office in Orange, in said State, (hereinafter oalled
Kthe licensee) is desirous of acquiring a license to manu¬
facture, to use, and to sell machines and records in accord¬
ance with said patent;

THEREFORE IN CONSIDERATION OP Five Dollars ($5.00), in.
hand paid to the linensor by the licensee, receipt of which
is hereby acknowledged, the licensor has granted, and does
hereby grant, to the licensee the right to manufacture, ubb
and sell, during the term of said patent, maohineB, appli¬
ances and sound-records covered by said patent, this right
to extend to foreign countries where the licensor or its
grantors or grantees or successors have obtained, or may
hereafter obtain, patent protection for the said invention.

IT IS HEREBY AGREED between the parties, aB a part con¬
sideration for this license, that the licensee will forthwith
discontinue opposition to the grant of the patent applied
for in Germany, and that all legal proceedings relating to
said patent' shall be dismissed. The amount paid in consider¬
ation of this license includes the entrance fee and royalties
established by the licensor for lioenses under German patent
No. 130,949.

THIS LICENSE is personal to the licensee and not tranB-

(2)

!; ferable.

1 the LICENSOR hereby releases the licensee, and all its
I vendees, from claims for past damages or royalties for the
!; use of said invention and agrees upon -request to execute to
ji the licensee all furthe rj instruments necessary to carry into
ij effect this agreement, and warrants that it is the owner of
j! said invention and the patent granted thereon.

IN TESTIMONY V/HEREOE the parties hereto have signed this
i! agreement this / O'" day of 1903.

Attest:

' Secretary.

* J5~

t yo

DYER & DYtR

specialty: patents and corporations

31 NASSAU STREET

new York. Oct. 13th, 1904.

Erank 1. Dyer, Esq. , _

Edison Laboratory, Qty

Orange, n. J.

/ Oct W

Dear Sir:- I { .Mi V

\ \ ‘904 J

The following is a list of all suits sPE^h^nffM^pon
our docket brought by the American Graphophone Co. against the
Edison Phonograph Works and allied interests as well as all
suits brought by the Edison Phonograph Co. against American
Graphophone Co. , and its allied concerns, previous to Deb. 1896.

SUITS BROUGHT 1ST U. S. CIRCUIT COURT POR THE SOUTHERN
DISTRICT OP NEW YORK.

Thomas A. Edison v. James 0. Clephane. Suit brought
Dec. 13th, 1895 on patents Nos. 414, 761 and 430,274. Discon¬
tinued by consent Dec. 9th, 1896.

Edison Phonograph Co. v. James 0. Clephane, two suits
brought Dec. 13, 1895, on patents Nos. 382,462 and 430,278 re¬
spectively and discontinued by consent Dec. 9th, 1896.

Thomas A. Edison v. G.W . Saxton. Suit brought Peb.

8, 1895, on patent No. 414,761. Our docket does not show the
disposition of this case but it was probably discontinued.

Edison Phonograph Co. v. G. W. Saxton, (Manager Union
Talking Machine Co..), two suits brought Peb. 8, 1895 on patents
Eos. 382,462, and 450,278 respectively. Our docket does not
show the disposition of the cases. They were probably discon¬
tinued.

Prank L. Dyer, Esq., — 2.

American Graphophone Co. vs. Cleveland Walcutt, Walter
H. Miller and Henry J. Hagan. Suit brought Nov. 13 , 1894 and
discontinued by consent Dec. 9, 1896. Our docket does not show
op vhat patents the bill was based.

National Phonograph Co. , Edison Phonograph Works, and
New York Phonograph Co. vs. Columbia Phonograph Co. and E. D.
Easton. Two separate suits brought Oct. 9th, 1896. Both dis¬
continued Dec. 9, 1896. First suit was brought on patent No.
382,416, and others, the second suit being based upon patent
No. 386,974 and others;

SUITS BROUGHT IN SUPREME COURT, DISTRICT ' OF COLUMBIA.

The Volta Graphophone Co. and American Graphophone Co.
vs. Columbia Phonograph Co. and E. D, Easton. Suit brought Feb.
14» 1895 > prima .faoie testimony taken, Dyer & Seely appearing
for defendants, but withdrew on their own motion some time after
Aug. 4, *894.

Edison Phonograph Co. vs.. American Graphophone Co.,

S. M. Bryan and E. D. Easton. 9 different suitB were commenced
in June 1893. Were afterwards discontinued probably about Dec.'

1896.

Prank L. Dyer, Esq. , _ 3.

SUITS BROUGHT ^IN U. S. CIRCUIT COURT, DISTRICT OP HEW JER- *

American Graphophone Co. vs. U. S. Phonograph Co. , D.

H. Emerson and G. E. Tewksbury. Suit brought Oct. 15, 1894,
on patents Hos. 341,214, and 341,288. Case was argued at final
hearing after the taking of proofs on Sept. 15th and l6th,

1895, decision' being reversed by the Court. Pudge afterwards
died before rendering decision. Discontinued by consent Dec.

10th, 1896. •

Edison Phonograph Co. v. E. 0. Rockwood. 3 separate
suits were brought Dec. 13th, 1895 and discontinued Dec. 12,' 1 '

1896.

The Volta Graphophone Co. and Amerioan Graphophone
Co. vs. Edison Phonograph Works, suit brought Peb. 20, 1893,
on patents Ho. 341,214, and 341,288. Discontinued by consent
Dec. 12, 1896.

SUITS BROUGHT IH THE y. S. CIRCUIT COURT EOR THE DISTRICT
OP COHHECTICUT.

Edison Phonograph Co.vs. Thomas H. Macdonald. Hine
separate suits were brought Pune 81*1893, prima facie proofs
taken in each one and a consent decree entered Dec. 1894. Suits
were brought respectively on patents Hos. 382,416; 386,974;

593,966; 393,967 ; 393,968; 400,646; 400,647; 430,278;

484,583. A further suit was brought against the defendant

Frank L. Dyer, Esq., —4.

June 28, 1893 , on patent No. 499.879i which v/as disposed of
in the same manner after prima facie proofs had been taken.

SUITS BROUGHT IN U. S. CIRCUIT COURT, EASTERN DISTRICT OF
PENNSYLVANIA,

American Graphophone Co. vb. -38i A. Hawthorne and
Horace Shevele (standard Typewriter Exchange), suit brought
Jan. 22, 1895 , discontinued Deo. 1896.

In all the above cases exoept where otherwise stated,
the suits were disposed of after filing of replication without
any intermediate steps being taken. In those suits Vhere no
patent numbers are given our docket fails to give us any infor-
mation.on what patents the suits were based.

JRT/V

TELEPHONE N0.20BS MARKET NeWark, N, J. JUjl 6 9 th, 1910,

H. H. Dyke, Esq.,

c/o National Phonograph Company,

Orange, N. J.

Dear Sir:

I have your favor of the 7th. 1 see no reason why, par¬
ticularly in view of the fact that, you will get the unanimous consent
of the stockholders of both companies, the National Phonograph Company
and the Edison Manufacturing Company should not be merged as. proposed.

Yours very truly .

urs very truly,

Aug. 15, 1910.

. Dyfe:

Hr. Dyer has made an assignment of the Tarioi^s^and^i^
prospective suits as indicated upon the accompanying list,
which please return after noting the same. The" annexed letter
from JIT.. Pay refers to our letter,; of the 9th inst., alleging
infringement of Patent Mo. 964, '221. He is mixed up on this,
as the letter referred to notifies his client of infringement of
Weber Patent Ho. 932,202. Mr. Pay was previously, to-wit, on
July 27, 1910, notified of the infringementijpatent Ho. 964,221
and acknowledged receipt of this letter, so that we know both
letters of notification reached the United States Phonograph
Company. They were both sent by registered mail and the
receipts should be looked up and put in the correspondence files f-
of these prospective suits I hand you herewith five copies
of Patent Ho. 932,202. ^

DH/fcOK

[ENCLOSURE]

Bates Machine Company

8“it f°r unfair competition, including an account-
xng - Mr. bmall .

(15) Suit for unfair competition, including contempt
^ proceeding - Mr. Small.

(16)

(f) ...

Bank b Electric and Manufacturing Co.

Suit on Dodge patent.

(e)

Waterburv Battery Company
Proposed suit on Dodge patent.

Proposed suit on patent to be granted on zinc plate

(Signed) Delos Holden
D. H.

DH-JS

[ENCLOSURE]

u£ai Z/&

,/S*^S 26

V *

Ouf/5, Wo

.Sul. to against or by Amorloan Graphot>hone Company and !
Columbia Phonograph Company. Gen 1 1 .

/r '/? . 'Vest Virginia suits - three suits upon the molding .

of phonograph records, handled ae one suit - Mr. Dyke. ■'

Y'^" (2) Suit <

/?Mr. Dyke.

(3)

Smith patent oovering swiveled stylus lever -

Suit on Edison button ball patent - Mr. Smith.
Proposed suit on Edison 200 thread record patent j

(b) ‘ /.'

, ^U.lte against United States Phonograph Company

Suit on Edison button ball potent,
lui't or, Weber patent covering ntylui

for POO thread

S (7) \ Proponed suit on Edison 200 thread rcoord

(8) Proposed euit on Weber. patent -No.

/ 'x^Snch inej having two feed screws.

932,20?
. McNulty - Mr. Smi

Jatejnll.

covord-ngi

' Suite Against IndeetruotJbl e Phonographic .Record fin

on Efison patent for expanding blank, No. 713^09 -
>V r?-\. Church, assisted by Mr. Smith. :

1*. SuHtbr

(IK)

* Edison vacuous deposit process - Mr. Sbldeiit---

(d) • '•••

Yiotor Talking Maohine Company - Hi
Application for onnoellation of trade mark • "Ambepb'a'p “ .
Interference - Dennison vs. Pierman - Mr. Holjten.- '

[ENCLOSURE]

(e)

Bates Machine Company

O'O Suit for unfair competition, including an accoun
' ' mg - Mr. Small.

Of?) Suit for unfair competition, including contempt
f — - proceeding ~ Kr. Small.

(f)

Bnnfrs Electric and Ham

(16) Suit on Dodge patent.

(e)

Water bury Battery Company
( ] ?■) Proposed Buit on Dodgo potent.

(IB) Proposed suit on patent to be granted on zinc plat'c

(Signed) Delos Holder.
D. H.

Ootober 11, 1910.

Robert H. McCarter, Esq.,

Prudential Building,

Newark, II. J.

Dear Sir:-

RK: CONSOLIDATION OF EDISON COMPANIES.

*/ith reference to the proposed inclusion of the Edison
Phonograph Works in the consolidation of the Edison Companies, the
facto, briefly stated, are as follcwo:-

1. The Edison Phonograph Works was incorporated under
the Corporation Aot of 1875 and amendments thereto, the date of its
incorporation being April 50, 1888. I enclose a copy of the Cer¬
tificate taken from the Minute Book. As you will see from such
copy there is no provision made therein for enabling a majority of
the stockholders, however great, to dispose of the property of the
Works as an entirety.

S. The original stock of the Edison Phonograph Works
was three hundred thousand dollars ($300,000.) and waB later in¬
creased to six hundred thousand dollars ($600,000.), the par value
ojfvtkc shares being one hundred dollars ($100.) eaoh. The legal
title to all the shares is held or controlled by Mr. Edison with
the exception of two hundred forty-eight (348) shares which ore
held by Mrs. Batchelor, the widow of Charles Batchelor.

Robert R. McCarter, Esq., — Page 2 — lO/ll/'lO.

3. Fifty- two percent. (53$) of the capital stock, or
three hundred twelve thousand dollars ($312,000.), was issued to
Mr. Edison in return for patent and other rights, pursuant to the
provisions of Paragraph "Third" of the agreement of May 13, 1888,
between said Edison and said ’forks, copy of which is also enclosed
herewith. Pursuant to the provision* of Paragraph "Fourth" thereof,
thirty-eight peroont. (38$) of this 53$ of stock, or eleven hundred
eighty-five and six-tenths. (1,185 6-10) shares of the par value of
one hundred eighteen thousand five hundred sixty dollars. (.$118,560.),
v/as deposited under trust agreement with the Mercantile Trust Co.
There are two agreements between Mr. Edison and the Mercantile Trust
Co. — one dated January 21, 1890, and the other dated April 8, 1890
— and 1 am also handing you copies of these agreements herewith.

By an agreement dated April 8, 1890, between Mr. Edison and Charles
Batchelor, of which I likewise send you copy, Mr. Edison agreed to
hold one-tenth (1-10) of the shares deposited with the Mercantile
Trust Co., or one hundred eighteen and fifty-six one-hundredths
(118 56-100) shares, for the use and benefit of said Batchelor,

Mr. Edison to retain the voting rights. Provision is made in this
agreement (in the event of Mr. Batchelor's death, which cook place
a year or so ago) for determination of Mr. Batchelor's rights under
the agreement, and the payment by the Works to his estate of the
amountav/hioh his rights thereunder might be worth by means of the
customary devioe of an arbitrator appointed by each of the parties
and a third appointed by the two so chosen. The original agreement

Robert H. McCarter, F.sq., -- Page 3 -- 10/l'l/'10.

of May 12, 1888, in the last paragraph thereof, provides that the
stock deposited with the Trust Company shall net be entitled to
dividends under twenty-five percent. (25$), and contains a provis¬
ion as follows: "That in case the Company is dissolved or should

go into liquidation, such trust stock (1,12? 6-10 ’shares) shall not
be entitled to participate in the property or assets of the Company.
Dividends over 85$ have never been paid and likely never will be.

4. On August 2,. 1897, the Works mortgaged all its entire
property, priveleges, franchises, good will, real estate, and build¬
ings, machinery, tools, etc., to the Fidelity Trust Company, by deed
of trust to secuye an issue of bonds to the amount of three hundred
thousand dollars (§300,000.) Some of these bonds have been paid
off and but two hundred eight (206)' are now outstanding} of the

203 all but twenty (80) are held directly by Mr. Edison or his fam-«v
ily.'j There has been no default in any payment relating to these
bond's. 1 enclose copy of bond and mortgage, also taken from the
Minute Book. The original I understand is with the Fidelity Trust
Company.

5. The book valuation of the property of the Edieori Phono¬
graph Works on the 1st. cf June, 1910, was within a few thousand '
dbiiare of one million two hundred thousand dollars (§1,200,000.),

^/ofr^ubstantially twice the value of the authorized and issued cap¬
ital. stock. In this connection it should be remembered that the
prosperity of the Works and its gain in assets has been largely due

Robert H. McCarter, Esq., — Page 4 — lo/ll/'lO.

to the fact that the other .companies at Orange for which it has
done the manufacturing have been obliged under the agreement of

'J:

May 12, 1888, and other agreements based thereon, to payAa twenty
percent. (20$) clear profit on all its manufactures, thereby assur¬
ing it a certain profit whether earned by the other companies or
not, and that, as a matter of fact, some of the other companies,
and particularly the National Phonograph Company, lias had to dip
into the surplus of former years in order that it might pay this
20$ profit to the Works. In view of these facts and of the faot
that the directorate of the Works is controlled by Mr. Edison, it
seems apparent that this 20$ profit agreement could be set aside and
new agreements, providing for less profit on the part of the WorkB,
substituted, and that in such event the prosperity of the Works
would probably decline.

6. The last shares of the stock outstanding from Mr. Edi¬
son's control, except those held by liirs.’ Batchelor, were purchased
by him within the J>aBt year or so at five points above par. This
ie the only guide we have to the market value of the stocl; .

7. Mr. Edison has offered to buy Mrs. Batchelor' b stock
but she has declined to sell, saying ehe"wanted to talk it over with
her lawyer . "

Upon these facts we wish to have your opinion on the follow¬

ing points:-

Robert H. McCarter, Esq., — Page 5 — lO/ll/'lO.

(a) What ia the most eatiefactory and feasible/ method
to include the Work 9 in the proposed combination? j,/\

1 /X

(b) What steps are open to tie taken by Mrs. Batchelor
or her attorneys in her behalf in the event of such inclusion of
the Works in the consolidation, and the probable outcome thereof?

(c) What is the maximum amount which in your opinion
she would be entitled to under whatever plan or plans of consoli¬
dation you may propose; and what the minimum amount which Mr.
Edison would be justified in offering her? \v

LIST OF ENCLOSURES — Copies of:- \

^Certificate of Incorporation - Edison Phonograph Wor.>s,
1 ' ^ April 30, 1888a

«- . ~ Edison - Works Agreement of May 1£, 1808.

t (yW'ljtM’

Edison - Batchelor Agreement of April 8, 1800. » "

• Trust Co. Agreement of January 21, 1890.
- Trust Co. Agreement of April 8, 1890.

Works - Fidelity Co. Trust Deed of August 2, 1897.

Very truly yours,

hhd/l

j v Ootober 18, 1910.

Robert H. McCarter, Esq., ft

" V.' Prudential' Building,

J ; Newark, N. J.

• IV

Dear M’r. McCarter:-

The exact distribution of the six thousand
eharejs of the Edison Phonograph Uorke iss as follows

Directly held or controlled
j by Mr. Edison - 4,565.96 Shares

Deposited with Meroentile Trust

Co., Legal title in Mr. Edison — 1,185.6 "

j\ Held by the Estate of

/ \ Mr. Charles Batchelor— - 348 .44 11

Y .j TOTAL - ■ - - - 6.000 Shares

The 248.44 shares above referred to were

issued to Mr. Batchelor as follows:-

Certificate No. 1 -
" •' 44 -

TOTAL— - - - - 348.44 Shares

/ . ‘ -•£; ';^Ttte5-l-*i8'.56 shares, 10# of the Btock held .by

the Mercantile Trust: Co. in trust for, Mr. Edison; have nothing
tqyd'9/ with^ the 348.44 shares owned by the Batchelor estate,' and
are /entirely separate and distinot therefrom. These 118.56
shares are' part of the 38# of 535? which would not participate in
oase of the Works being dissolved or going into liquidation;

Robert H. MoCarter, Esq., — Page £ — 10/l8/'10.

while the 248.44 shares would participate in euoh event, and
it ie particularly to be noted that they '$ould participate in
exoess of their face valuation,, that is to say! their holder
in the event of dissolution or liquidation would be entitled to

a share in the proceeds represented by the fraction 248.44 .

4814.40

the numerator of the fraction being the number of shares held
by the Batchelor estate, and its denominator boing all the stock
which will participate in the Resets of the Company in case of
dissolution or liquidation, that is to say: 6,000 shares minus
1185.6 shares.

Very truly yours,

hhd/l

Herbert H. Dyke Esq. , &

Edison Phonograph Works, V

Orange, N. J.

Dear Mr. Dyke: -

Your two letters of Oct, ilth. and Oct. 13th. with the enclos¬
ures therein referred to, are before me, and I have given considerable
time to a consideration of the questions you BUbmit, with particular ref¬
erence to the practical method of joining the Edison Phonograph Works in
the proposed consolidation of the other Edison Companies, about which we
have conferred so many times.

The embarrassment of course ariBSB from the fact that there are
outstanding 248.44 shares of stock in the WorkB held by the Batchelor
Estate, upon whose co-operation you cannot count. The Works was incor¬
porated on or about the 30th. of April, 1888, Mr. Batchelor being one of
the subscribers to the Certificate of Incorporation, The period of
corporate existence, by the certificate which he signed, and to which he
became a party, was not to terminate until the 30th, of April, 1938. If
the Works should desire to adopt the plan of selling all of its assets to
the proposed consolidated company, without actually merging its corporate
existence therewith, the Batchelor Estate would doubtless have the power
to prevent Buch action, upon the ground that its stockholding interest
had a right to claim that the corporate business described in the charter
should be prosecuted, and that it was ultra v ire _s_ the Board of Directors,
or even of the stockholders, short of a unanimous consent, to denude the
Works of all its property^ The authorities in this. j3tate are so familiar

H. H. D. #2.

and so numerous upon this point, that I will not take time to cite them.

Another suggested course is that of merger, but unfortunately,
the act authorizing a merger was not passed until 1893, or five years
after the issuance of some, if not all, of the Batchelor stock, consti¬
tuting the 248.44 shares, and I think it is quite as well settled that
a recalcitrant stockholder can, by injunction, prevent a merger of his
Company with another corporation under an act authorizing such merger,
passed subsequent to the time of his becoming a stockholder. The recent
Colgate case, 67 Atl. Rep. 657; 72 id. 126, in which I was of counsel,

I think correctly assumes that this is the law. Hence, if the Batchelor
Estate desired to be obstreperous, and prevent the WorkB from merging, as
proposed, I am afraid it could interfere therewith. This, of course, is
quite independent of the provision now found in the Merger Act for a
condemnation of the stock of a stockholder unwilling to aBsent to a mer¬
ger otherwise legally possible. Such condemnation, as you know, can
only be initiated by the unwilling stockholder, and the Company is power¬
less to start them. They, however, are applicable when the merger is
otherwise legally feasible, which, as we have seen, 1b not the case here,
as against the Batchelor Estate.

It would therefore Beem as if neither one of the above named
methods of practical consolidation is surely available against the oppo¬
sition of the Batchelor interest. How far such opposition would really
be met, X of course cannot anticipate. You and your associates are much
better advised upon that point that I. I am simply assuming the worst,
and advising you upon naked legal principles.

The Works could still adopt the plan of dissolving and winding
up its affairs and having a Receiver sell its property in dissolution to
J the consolidated company. How far such a course would be injudicious im view I

H. H. D. #3,

of the large current business of the Works, X of course am ignorant of. It
may be that it would be impracticable, but I do not think the Batchelor
interest could legally prevent the disaolution, and while if this course
were undertaken, great care would have to be exercised to prevent the
claim that the dissolution 1b being conducted in the interest of Mr. Edi¬
son and the majority stock, who would also control the other company,
and of course be the purchaser of the property, yet nevertheless X am of
the view that it could not be prevented, and that the Batchelor interest
would have to be contented with its quota of the purchase money derived
from a sale on dissolution by the Receiver of the Works. The reason
why I have suggested a Reoeiver, is because of the fact of the practical
identity of the Boards of the several companies.

If dissolution were adopted, it would seem to me that under the
agreements between Mr. Edison and the Mercantile TruBt Co., none of the
trusteed stock would have to be considered as a participant, except the :
118.56 shares which are the subject of the agreement between Mr. Edison
and Mr. Batchelor, dated the 8th. of April, 1890. As I read that paper,

I conclude that it intended to differentiate the 118.56 shares in which
Mr. Batchelor wub given an interest, from the balance of the 1185.6 shares
deposited with the Mercantile Trust. The difference in the language
between the two agreements between Mr. Edison and the Mercantile Trust
Co., and Mr. Edison and Mr. Batohelor, with regard to the ultimate inter¬
est of Mr. Edison, satisfies me that even upon a dissolution, the Batch¬
elor interest in the 118.56 shares would have to be reckoned with. The
Batchelor agreement provides:

"It is, however, further agreed that if at any time hereafter
the first party (Edison) or his legal representatives shall sell, trans¬
fer, assign, or in any way dispose of the said 1185.6 shares of stock of
the Edison Phonograph Works, or any part thereof, or his rightB therein,
he or they will immediately thereafter either assign, transfer and pay

H. H. D. #4.

over to the said second party (Batchelor) or hie legal representatives,
all and every the benefits, profits and advantages accruing to him, the
saidpartyof the first part or his legal representatives, from the sale,
transfer or disposition of the said 118.56 shares of sald^tock^in which

S^d^oVSograg Worker

tives will immediately assign, transfer and payoveruntothesaidparty
nf fho second cart, that portion of the assets of the said Edison Phono
graph Works, or the avails thereof, received by the said pS?*y °Vd

his legal representatives, fairly and properly *^°^Xnartv o^hiS
118.56 shares of the said stock in which the Baid second party^oi hiB
legal representatives may be entitled, and interest hereund r.

The plain purport of this agreement is, I think, to give to
Mr. Batchelor or his representatives, an ultimate beneficial interest in
the 118.56 shares, and while, as between Mr. Edison and the Trust Company,
the agreements are by mutual consent terminable, yet such termination
would only result in the right of the Batchelor interest to demand an as¬
signment of the 118.56 shares. It' would therefore appear to me that in
estimating the value of "the Batchelor holding, the 118.56 shares, as well
as the 248.44 shares, would have to be considered, and the fractional
interest of the Batchelor claim would therefore, I think, be the sum of

248.44 and 118.56, or 567 of the purchase money acquired by the

AWCCStiPf- UCf 3 2, 9 (,

Beceiver for the assets of the Works. I would be glad to have you con¬
sider this last suggestion of mine with regard to the ultimate value of
the Batchelor interest, in view of the phraseology of the Batchelor
agreement. Perhaps I am wrong about it, although at the present writing
this Beoms to me to be the correct view.

In view of the conclusion above reached with regard to the un¬
feasibility of a merger, I have not undertaken to suggest an answer to
Point C, upon which you, in your letter of Oct. 11th, desired my opinion.

Very truly yourB, '• „ fl

Nov. 17, 1910.

Robert H. McCarter, EBq.,

Prudential Building,

Newark, N. J.

Dear Sir:-

REi PROPOSED CONSOLIDATION OF EDISON COMPANIES.

There are three ways of looking at the proportion of
the Batchelor Estate interests in the assets of the Edison Phono¬
graph Works J-

(l) Upon the basis of the May, 1888, contract, which
provides that the trusteed stook should not participate in the
case of the dissolution or going into liquidation of the Works,
the effect of which agreement if not changed by the later Batch-
el or-Edison^igrecment would be to deprive both Mr- Edison 1 s’ nine-
tenths and the Batchelor one-tenth of such trusteed stock of any
share in such assets. On this basis the Batchelor interest

would be 348.44. or 5.16# of the total assets.

4814.40

(3) Opon the basis of the May, 1888, agreement, con¬
sidering that both Mr. Edison's nine-tenths and the Batchelor
one-tenth of the trusteed stock should participate in the assets;

on this basis the Batchelor proportion would be 367, or 6.117#

6000 S -

of the total assets. !

Robert H. McCarter, Esq., — Page 3 — 11/17/' 10.

(3) Upon the basis suggested in your letter of
October 31st., in which it is considered that the one- tenth of
the trusteed stock held by the Batchelor Estate should\partici-
pate notwithstanding the agreement of May, 1888, to the effect
that none of the trusteed stock shall so participates on WHe
ta'eig the Batchelor interest in the total assets would be not

1&B3B7 , ns vou sucrsest. but 367 (since the 118.56 shares

4814.40 4933,96

would have to be added to both the numerator and denominator of
the fraction). Reduced to percentages, the Batchelor interest
figured in this way would be 7.43$.

You will see from the above that it is decidedly to
Mr. Edison's interests to effect a settlement, if a settlement
• can be effected at all with Mrs. Batchelor, upon the first or
second of the schemes outlined above, instead of upon the basis
of the third. It BeemB only fair that if the one-tenth of the
trusteed stock in which Mr. Edison gave Mr. Batchelor the bene¬
ficial interests ie to participate in the assets upon dissolu¬
tion, then Mr. Edison's nine-tenths should participate likewise,
and such construction of the document seems to me to be consis¬
tent with its terms.

Will you please run over the copies -sent you some
time since and -in view of the above suggestions give ub your
views on the subject.

It ie Mi. Dyer's opinion that the second method of

Robert H. McCarter, Esq., — Page 3 — 11/17/'10.

figuring the percentage above is the correct one, and it
seems to me, too, that if the Edison-Batchelor agreement has
any effect upon the May, 1888, agreement and I cannot
feel that it has no effect on the earlier agreement at all -
it should mate all the trusteed stock participate ih the
assets, a!nd not merely the one-tenth of the Batchelor, Estate.

Very truly yours,

HHD/hFX

Newark, N. J., Nov. 19, 1910.

H. H. Dyke Esq.,

Edison Phonograph Works,
Orange, N. J.

Dear Mr. Dyke:-

Replying specifically to your letter of the 17th. in regard to
the proposed consolidation of the Edison Companies, I beg to say that
upon further reflection and examination I have somewhat modified my viewB
touching the status of the 118.56 shares of stock held by the Bacheller
Estate. There is no doubt that Mr. Edison and Mr. Bacheller, in their
agreement of April 8th, 1890, undertook to bestow upon these 118.56 shares
of stock Borne kind of an interest in the assets of the Works, in the
event of liquidation, and had Mr. Edison, on the date of that agreement,
been in a position effectually to have carried out his intention, the
situation would have been different. It is plain^ however, that the
118.56 shares, being parcel of the 1185.6 shares^the subject of a special
agreement between the Works and Mr. Edison, whereby they were expressly
deprived of any participation whatever in the event of liquidation or
dissolution, it seems to me that Mr. Edison was powerless to thereafter
beBtow upon the 118.56 Bhares any participating power without the consent
of the other stockholders of the Works, of whom at that time there were,
as vou know, a considerable number. In ether words, it seems to me
that these other stockholders had a right to say that their stock at the
. time of the original agreement between the Works and Mr. Edison, had a
right to expect that the 1185.6 shares would not share in the liquidated

H. H. I >. #2.

aonot.B , and that therefore they could object to the dilution of their
interest by the bestowal upon the whole or any part of the 1185.6 BhareB
of the right to share in liquidated assets. This being so, the mere
faot that Mr. Edison has since acquired these outstanding shares, will
make no difference. He bought the latter with the right impressed upon
them to insist that there be no dilution of their value, and so the ef¬
fort that he and Mr. Bacheller subsequently made to give to the 118.56
shares a participating feature , if such was their effort, was, in my
judgment, futile, consequently it is my opinion that the first suggestion
of your letter of the 17th. is correct,/ and contains the proper fractional,
and percentage basis of the Bacheller/ interest, in the event of dissolu¬
tion. /

yery truly yours,

. 22, 1910.

Nov

Mrs. Rosanna Batchelor,

33 West 25th Street,

New York, » . Y .

Dear"Modam:-

I enclose herewith a copy of the original con-
traot'or-May 12, 1888, so th<*t you may see the rights of the
Works as originally defined. As a matter of faot, Mr- Edison
has quite considerably enlarged the operations of the Works by
turning over to it other lines of business not contemplated in
the original agreement.

The reason why Mr. Edison desires to obtain the
stock of the Works which you own is that its possession would
simplify the proposed consolidation of -the Edison companies at
Orange.

The value of the 3tock ie in a large degree specu¬
lative in that it is dependent entirely upon the continued pros¬
perity of the phonograph business. While we confidently believe
that the phonograph business is a permanent one, it ie neverthe¬
less true that the amount of business done now -is considerably
less than in 1907 .

The last sale of any stook of the Works was made by
a syndicate represented by the Guaranty e Trust Company, which .mad
a very careful investigation into our affairB^and^^cepted an off

Mrs. Rosanna Batchelor — P^ge 3 -A Nov. 22, 1910.

1 .

of 1.05. This was ii^ the spring of\l910, and since that
time the situation has not improved, and the stock is cer¬
tainly not worth any/more now than it yas then.

Mr. Ediso^i is not able to pay\cash this time
for -the stock, but.fhe is willing to buy the stock held by you
at the rate of 1.6k with the understanding\that the stock and
a general. release, will be put up in escrow with some trust
company and payments made thereon at the rate of two thousand
dollars- ($2,0Q0. ) per month, the stock and release to be turned
over when the amount is fully paid.

If you care to accept this offer please let me know
as soon as possible, because we have already gone ahead with
the consolidation papers, leaving out the Works, anu if the
Works are to be included we should know as soon as possible.

Very truly yours,

hhd/lel

! NOV 25 1910
FRANK L, DViifi, y

//tf <£-

Mrs. Rosanna Batchelor,

33 West 35th Street, ^

New York, N. Y.

Dear Madam

I am enclosing a form of release
in mind in writing you on Novembor 23nd.

December 1, 1910.

suoh as 1 had

I had not taken up the matter of the release
with Mr. Edison at the time of writing you on the 33nd., but
made the suggestion of a release merely as a matter Of routine,
and in accordance with the oustom generally prevailing among
lawyers .

I have now called the matter to Mr. Edison's ' ,
attention and he states that it will not be necessary for yiu
to give him a release. The enclosure is accordingly sent ypu

for your information only, and there will be no occasion for N
you either to sign the enclosed paper or to place it with the
stock certificates in the hands of the Trust Company as sugges¬
ted in my former letter. \-

For the reasons stated in my letter of November 22nd.
I hope to have an early reply to Mr.. Edison's offer.

Very truly yours,' / , '

/fr*^

Dec . Id, 1910.

Mrs.' Rosanna Batchelor,

33 West 2!>th Street, «

New York, II. V. ; ’J

Dear Madam: -

I have just returned from a western trip, and find
your letter of December 5th. I am, of course,- familiar with
the contract relating to the 118. 56 shares to which you refer.

Mr. Edison tells mo that the 1185.6 shares, of which this is
one-tenth, never represented any ownership in the holdings or
assets cf the Works, but were issued for two purposes only,
namely: to give him voting rights, and to assure to him a share
in the dividends above twenty-five peroent. ir it should tu&i out
that t, he Works would pay exceptional profits and declare divi¬
dends in excess of that amount. In the contract to which you re¬
fer, which reserved the voting rights to Mr. Edison, the only
thing. which passed to Mr. Batchelor wasttlie right to share in any
dividends which might be deolared in excess of twenty-five per¬
cent. As a matter of fact, there never have been such dividends
declared, and the Works has never made profits justifying : any such,
dividends, and it is altogether unlikely that any such dividends
will be paid hereafter, as the keen competition in the- phonograph

Mrs. Rosanna Batchelor — . Rage 2 -- 12/14/'10.

business of the present day keeps profits far below the per¬
centage indicated. We were, therefore, of the opinion that
under all the circumstances the interest oonveyed in the
118.56 shares by this agreement is entirely valueless} but
not wishing to fely on o\ir own judgment, wc have referred the
matter to Mr. Robert H. McCarter, of Newark, N. J., formerly
attorney-general of this State, and he has advised Us that our
views on the subject are correct.

I have copied below the provisions in the contract
between Mr. Edison and the Works, providing for the issuance
cf this stock, so that you may see that it was never intended
that the holding of this stook should represent any dwnership
in the property of the Works; but merely secured voting rightB
and the right to share in dividends ' in exoess of "tip. twenty-
live percent-^,

"1. That said stock so delivered to the trustee
shall not .participate in any of the e'arnings of the
\ party of the second part nor be entitled to share ir.
any dividends. If, however, the; earnings of the .
Company which it deoidea to declare as dividends in
any one year amount to over twenty-five peroent. (35#)
on its entire stook exclusive of : such stook so held in
trust as aforesaid, then suoh trust stock shall be en¬
titled to participate ratably with the other stock in
suoh excess; and - . ■

j 2. That the party of the first part, his heirs,
executors, administrators and assigns shall have the
exclusive right to vote upon the stock so held in
..trust. 'at all meetings of the Company, and a proxy -shall-
6e given him or them for such purpose; -and. . .

3. ihat if C-.8 t e Company is die olved -.r
, shoul d go into liquidation such trust stock shall not , •

be entitled to participate or share in the property, or,
_ . . assets , of the Company. • "

Mrs. Rosanna Batchelor — Page 3\- 12/14/'lo.

However, aoide from the foregoing, this matter
is entirely arart from Mr. Edison's proposal to purchase
your holding of 248.44 shares of tije stock of the Works,
and any interest which you may' have in the 118.56 shares
would remain in you, irrespective of your disposition of
the % hares which Hr. Edison has offered to purchase,
j T shall be pleased to know your decision on

* Edison's offer at an early date; and if you hav.e any
■suggestions to make regarding the one-tenth portion of .the
trust Company stook referred to in Mr. Batchelor's agreement
w.;th Kr. Edison, I shall be glad to consider the same either
in connection with .the offer for the 248.44 shares cr ae a
separate matter.

TWENTY-FIFTH STREET.

t?4 ^

«' - - -

/It*.

Mrs • Rosanna Batohelor,

35 West 25th Stroet.
Now York City.

Your favor of tho 26th in^fr. has boon received,
and in aocordanoe with your request ifbog to hand you copies
of the two contracts roforred to. If;>thore are any othor
papers you wish to have copies of, lotjine know and I will
10 slsi 10

‘ Il%hopV'you will he able to make up your mind soon
about this matter because, otherwise 1 will have to go ahead
and bring about the consolidation leaving out the Phonograph
Works * -and this has to hq done so that the plan may bo in
operation before the end of the fiscal year on February
28th next. .

Yours very truly,

Legal Department Records
Phonograph - Correspondence

Douglas Phonograph Company

This folder contains documents relating to the formation of the Douglas
Phonograph Co., a New York corporation organized as a successor to
Douglas & Co. The company was formed in November 1904 and dealt in
Victor talking machines as well as Edison phonographs. It was controlled by
the National Phonograph Co. The selected items cover the years 1 904 and
1906. They consist of a letter from New York attorney Frank E. Bradley to
Frank L. Dyer regarding the reorganization of Douglas & Co; minutes of the
first meeting of the incorporators and subscribers of the Douglas
Phonograph Co.; and the president's and treasurer's report for the year
ending October 31, 1906.

Approximately 20 percent of the documents have been selected. The
items not selected include correspondence, minutes, and memoranda
pertaining to the operations of the company.

Prank L. Dyer, Esq., Gen. Counsel, - w'jK' £.

Edison Laboratory, '

Orange, N. J. c \~fj

Dear Sir:- \ , ;~!04

Pursuant to your request of day before yesterday, I beg'&SE^
submit herewith an outline of a plan which 1 suggested to Mr. Gilmore to
meet the Douglas & Co. situation. As you know, at this time I can do
no more than outline, for the reason that the facts upon which any plan
of action is to be based are not yet to be had.

One of the main causes of trouble in the past in this matter
has been the fact that the business, while it has practically been
financed by the National Phonograph Company, still that company had no
legal control over the business. It occurred to me that if a small New
York corporation were formed, that difficulty might be best obviated.

In substance, it would mean to do as follows: whatever cash the business
has on hand could be sold to the new company for Btock at par; the
balance of the proposed issue of stock could be sold to Mrs. Douglas for
the good will, trade name, etc. of Douglas & Co. Mrs. Douglas, being
interested in the preservation of the company, I assume, would be willing
to enter into a plan whereby the National Company would be in complete
control of the corporation until its claims are paid. The new company
would probably put the old accounts into the form of notes, maturing at
regular intervals and in such amounts as shall be determined upon.

Mrs. Douglas ought to. endorse these notes also individually, because in
so doing she would incur no liability other than the one which she now
has- that is to say, she is personally liable for all of those debts.

As to what understanding and in what way Mr. loucks will figure in this
reorganization, is a matter which the parties will determine among
themselves. I made a suggestion the other day that in my opinion it was
the hast policy for our clients to have both Mrs. Douglas and Mr. Loucks
jointly interested in having the company pay off its debts to our
clients, thereby benefiting themselves in the building up of a business
of their own.

As you see, this is an outline merely, but I believe that if
the parties agree, based upon it, a feasible plan will be evolved and
that the best interests of all concerned will be furthered.

Yours very truly,

FIRST MEETING OP INCORPORATORS AND SUBSCRIBERS

DOUGLAS PHONOGRAPH COMPANY.

PIRST MEETING of the Incorporators and Subscribers
held at the office of the Corporation, at 290 Broadway in
the City of New York, State of Nev; York, on the first
day of November, 1904, at tv/o o'clock in the afternoon.

Call to Mr, Edward E, Pranchot, one of the subscribers to the

order.

Certificate of Incorporation and to the Capital Stock of
this corporation called the meeting to order, and stated
the obj ect thereof.

Election On motion duly made and seconded and carried, Mrs.

of ’

Chairman Martha Virginia Douglas was nominated Chairman of the meet¬
ing, and a vote'being duly taken, was duly elected to take
such position.

Election On motion duly made, seconded and carried, Mr. Char-

Se of

Sec re tary les V. Henkel was nominated Secretary thereof, and a vote

having been taken, was duly elected to occupy such position
Each accepted his or her respective office and
discharged the duties thereof until the close of the meet-

Subscribers There ware personally present the x'ollov/ing subserib-
personally

present, ers to the Capital Stock;

Martha Virginia Douglas Mast Orange, IT. 1. 48 s lares

Charles V. Henkel 290 Broadway, Hew York 1 »

Edward E. Eranchot 290 Broadway, Hew York 1 «

Calii°f On motion duly made, seconded and carried, the roll

of the incorporators and subscribers was called by the
Secretary, and each of the above named incorporators and
subscribers present, representing the number of shares set
opposite to his name respectively, answerc-d present,’ show¬
ing that the total nunbsr of shares was present in person.

On motion duly made, seconded and carried, the Secre¬
tary was directed to spread the same at length upon the
minutes .

At the close of the roll call the Chairman declared

that 50 shares of the capital stock vie re represented and

that the meeting was completely organized and competent' to

proceed to the transaction of business.

Pressnta- The Secretary then presented and read a waiver of

tion of

Waiver of notice of time and place of holding the present meeting,
Hotice

■ signed dry - all 1#e incorporators and subscribers to the
capital stock of the company.

Upon motion duly made, seconded and carried, the same
was ordered on file and the Secretary was requested to
cause the same to be spread at length upon the minutes of
the meeting.

Waiver of WAIVER OR NOTICE

Notice .

MEETING OF INCORPORATORS AMD SUBSCRIBERS
Of

DOUGLAS PHONOGRAPH COJIPANY.

We, the undersigned, being all the parties named in
the Certificate of Incorporation of Douglas Phonograph Com¬
pany and all the subscribers to the Capital Stock thereof,

Do hereby waive all notice whatsoever of the first
meeting of the incorporators and subscribers to the Capital
Stock of the said Company, and do consent that the first
day of November, 1?04, at (2) two o'clock in the afternoon,
be and hereby is fixed as the time, and the office of the
Company at No. 290 Broadway, in the City of Hew York, as
the place, for holding the same, and that all such business
may be transacted thereat as may lawfully come before
the said meeting.

Dated the first day of November, 1904.

Charles V. Henkel
M. V. Douglas
Edward W. Pranchot

Secretary's The Secretary then presented and read to the meeting
Report as

to corapli-a certified copy of the Certificate of Incorporation of the
ance with

legal re- Company and reported that the same had been filed and re¬
quirements

as to fil-corded in the office of the Secretary of State of the State
ing, &c.

of Hew York, on the 28th day of October, 1904, and that
the organization tax of l/20 of one per cent on the auth¬
orized capital stock of the Company had been paid to the
State Treasurer, to wit: the sum of Twelve 50/100 Dollars
and that a receipt therefor has been given by him on the
28th day of October, 1904, and that a duplicate original
of the said Certificate of Incorporation together with
the receipt from the State Treasurer had been filed and
recorded in the Office of the Clerk of the County of Hew

Report York, the County in which the urine inal office and to lace
of pay¬
ment of of business of the corporation is to be located and that
filing

fees. all the fees for filing and recording such certificates
had been duly paid before filing.

Upon motion duly made and seconded and carried, it was
RESOLVED, That said report be accepted as correct,
and the Secretary be requested to cause such certificate
and receipt to be spread at length upon the minutes of the
meeting.

CERT ISC CATE OP INCORPORATION
OP

DOUGLAS PHONOGRAPH COMPANY

Yffi, TH E UHDRRSIGNED, desiring to form a corporation
under the laws of the State of Hew York, pursuant to the
provisions of The Business Corporation Lav/, all being of
full age, and all being citizens of the United States, and
at least, one of us a resident of the State of New York, do
hereby certify:

Pirst: That the name of the proposed corporation

id DOUGLAS PHONOGRAPH COMPANY.

Second: That the purposes for which said corporation

is to be formed are :

I. To carry on any business which a business cor¬
poration can properly engage in under the laws of the
State of New York, and particularly the business of buying,
selling and dealing in Talking Machines of every descrip¬
tion and all that relates thereto.

II. To purchase or otherwise acquire Letters Pat¬
ent granted by any country in the world, or any interest
therein, to hold, sell or develop the same or grant li¬
censes thereunder.

Third. That the amount of the Capital Stock of the
said corporation is Twenty five thousand dollars, ($25000),
all of which shall consist of Common Stock.

Fourth. That the number ox shares of which said Capital
Stock shall consist is Two hundred and fifty, each of which is
One hundred dollars, and the amount of capital with which said cor¬
poration will begin business is Five thousand dollars (§5000) .

Fifth: That the principal business office is to be

located in the City of I'Tew York, Borough of Manhattan, County of
Hew York and State of Hew York.

Sixth. That the duration of said corporation is to
be perpetual.

Seventh. That the number of Directors of the said corpor¬
ation is three.

Eighth. That the names and post office addresses of the
Directors for the first year are as follows:

Hame s . Post Office Addresses.

Martha Virginia Douglas East Orange, Hew Jersey.

Charles V. Henkel, 290 Broadway, Hew York City

Edward E. Francliot, 290 Broadway, Hew York City.

Hinth. That the names and post office addresses of
the subscribers of the certificate and the number of shares of
stock each agrees to take in said corpo ration are as follows: -

Haines Post Office Addresses. Ho. of Share

Martha Virginia Douglas
Charles V. Henkel
Edward E. Franchot

Tenth. Th9 Company shall have the power to purchase •
or otherwise acquire the stock, bonds, securities or other obliga¬
tions of any other corporation, and while the owner thereof to

Post Office Addresses.

East Orange, H. J.

290 Broadway, Hew York, H.Y.
290 Broadway, Hew York, H.Y.

exercise all the rights and privileges of individual ownership,
including the right to vote on such stock.

11T WITEESS WHEREOF, we have made, signed and acknowledged
this certificate this 2Dth day of October, 1904,

Martha Virginia Douglas ( SEAL)

Chas. V. Henlcel (SEAL)

Edward E. Franc hot (SEAL)

STATE OF HEW YORK! :

COUl-TTY OF HEW YORK ! SS *

On the 25th day of October, 1904, before me personally
came Martha Virginia Douglas, Charles V. Henkel and Edward W.
Franchot, to me known and known to me to be the individuals de¬
scribed in and Who executed the foregoing certificate, and they
severally acknowledged to me that they executed the same.

(SEAL)

M. A. Howser,

Hotary Public,
County of Hew York.

$12 . 50 TREASURER'S OFFICE — STATE OF HEW YORK

Albany, Oct. 28, 1904.

RECEIVED from DOUGLAS PHOHOGRAPH C01JPAKY- . — .

Twelve & 50/l00 - - - - - - - - Dollars,

in ftall of tax of one-twentieth of one par centum upon the Capital
Stock of $25,000 of the above named Company for the privilege of re

organization, pursuant to chapter 908, Laws of 1896 as amended.
Willis E. Heinman, B. h. Davis,

Second Deputy Comptroller. Deputy Treasurer.

Report as Hr. Charles V. Henkel, one of the Directors on behalf
to sub-

scrip- of those named, as Directors in the Certificate of Incorpor¬
ation, then presented and read the subscription list to the
Capi tal Stock of the corporation and reported that fifty
shares of the said stock had been subscribed for and that
the ten per cent cash payment had been made as required by
law upon each share which was payable in money, and that
the same had been deposited for the Company with the Di¬
rectors and said subscriptions had, since the filing of the
Certificate of Incorporation, been accepted.

Upon motion duly, made, seconded and carried, it was
RESOLVED that said report be accepted as correct and
that this Company accept such subscriptions and together
v/ith said subscription list be filed with the Secretary of
the Company and that the Secretary be r quested to spread
the said subscription list upon the minutes, and to notify
the said subscribers of the acceptance of their respective
subscriptions .

Report of Hr. Charles V. Henkel, on behalf of the Directors

Payment of

• , named in .the Certificate of Incorporation, reported that
wit.il which

business the sum of Hive Thousand Dollars named in the Certificate
is to be

coiamenc- of Incorporation as the amount with which the corporation
is authorized to begin business, had been paid into the
hands of Mr. Charles V. Henkel, who r eported that he held
the said sum on behalf of the said Company, and was ready
to pay the same to the Treasurer as soon as he should be
selected.

Upon motion duly made, seconded and carried, it was
RESOLVED, that said report he accepted as correct and
filed with the Secretary of the Company.

Appointment On motion duly made, seconded and carried. Messrs .
of Commit¬
tee to Edward E. Eranchot and Charles V. Henkel wars appointed a.
prepare *

By-laws, Committee to prepare a set of hy-laws for. the regulation

of the affairs of the Company, the management of its
property, the transfer of its stock, and the calling of
meetings of its shareholders and directors, and fixing what
attendance and what amount of stock must he represented
thereat to constitute a quorum, and such other matters a3
can properly he contained in such hy-laws, and to report
the same to the meeting at their earliest convenience.

Upon motion duly made, seconded and carried, a recess
was taken until the Committee should he ready to report to
the meeting.

Report of The Chairman called the meeting to order and

Chairman

on By- announced that the Committee was ready to render its report
laws

whereupon the Committee to whom had been entrusted the
drawing up of hy-laws presented its report with a proposed
set of hy-lav/s, which ware taken up and read clause hy
clause and separately carefully considered and discussed at
length hy the members, and

Adoption Upon mb t ion duly made, seconded and carried the

of By-laws

following were adopted as and for the hy-laws of the Com¬
pany and the Committee discharged with thanks, and

10.

Upon motion duly made, seconded and carried, the
Secretary was instructed to cause the same to he spread at
length upon the minutes.

BY-LAWS

DOUGLAS PHONOGRAPH COMPANY

Article I.

MEETING OP STOCKHOLDERS

Sec. 1. Annual Meetings. The annual meeting of stock
holders i’or the election of Directors for the ensuing year
and for such -other business as may properly come before the
meeting, shall be held at the office of the Company in
the City of New York, Borough of Manhattan, on the third
Monday of November of each year at two o'clock in the
afternoon of that day and should the said day fall upon
a Sunday or upon a legal holiday, then upon the first
day thereafter not a legal holiday. The Secretary shall
serve personally or send .through the Post Office, at least
ten days before such meeting, a notice thereof addressed
to each stockh older at his last known Post Office address,
and publish notice thereof as required by law. At all
meetings of stockholders, except where it is otherwise
provided by law, it shall be necessary that stockholders,
representing in person or by proxy a majority of the Cap¬
ital Stock shall be present to constitute a quorum.

3.1 .

In case a quorum shall not he piresant at any meeting, a
majority of those present may adjourn the meeting to such
future date as those present may determine, and the Sec¬
retary shall thereupon mail or serve written notices of
such adjourned meeting to each ol the stockholders of
record of the Company as hereinbefore provided*

Sec, 2, Special Meetings, Special meetings of stock¬
holders, other than those regulated by statute may be call¬
ed at any time by a majority of the Directors upon ten
days' notice to each stockholder of record, such notice
to contain a statement of the business to be transacted at
such meeting and to be served personally or sent through
the Dost Office addressed to each such stockholder of
record at his last known Post Office address.

The Board of Directors shall also in like manner
call a special meeting of stockholders, whenever so re¬
quested in writing by stockholders representing not less
than one-third of the capital stock of the Company.

ITo business other than that specified in the call for
the meeting shall be transacted at any special meeting of
the stockholders.

Sec. 3. Voting. At all meetings of the stockholders
and at all elections of Directors, each stockholder, in
person or by proxy, shall be entitled to cast one vote for
each share of stock standing in his or her name on the
transfer books of the Company at least ten days preceding
the meeting. All proxies shall be in writing and shall be
filed with the Secretary at or previous to .the time of
meeting.

. 12.

Sac. 4. Order of Business. At all me stings of stock¬
holders the following order of business shall bs observed
so far as consistent v/ith the purposes of the meeting, viz:

1. Call of Roll.

2. Report of proper notice of meeting

3. Reading minutes of preceding meeting and ac¬
tion thereon.

4. Report of President

5. Report of Secretary

6. Report of Treasurer

7. Report of Committees (if any)

8. Election of Directors

9. Unfinished business

10. Hew Business.

ARTICLE II.

DIRECTORS

Sec. 1. The number of directors shall consist of
three.

Sec. 2. At the annual meeting the three persons re¬
ceiving a plurality of the votes cast at the election held
thereat, shall be Directors for the ensuing year.

Sec. 3. The term of office of each of the Directors
shall be one year and thereafter until a successor be elec¬
ted.

Sec. 4. The Board of Directors shall have the entire
management and control of the business of the corporation,
and shall employ such agents and servants as they may deem

13.

advisable, and fix the rates of compensation of all offi¬
cers, agents and employees .

Sec. 5. Whenever any vacancies shall occur in the
Board of Directors, by death, resignation, or otherwise,
the same shall be filled without undue delay by the majo¬
rity vote by ballot by the remaining members of the Board.
The person so chosen Bhall hold the office until the next
Annual Meeting, or until his successor is elected and
qualified.

Sec. 6. The. Board of Directors shall meet at the
office of the Company on the third Monday of each month, or
at such time and in such places as they may by resolution
determine, and they may adopt such rules and regulations
for the conduct of their meetings and the management of the
Company as they may deem proper, not inconsistent with
these by-laws and the laws of the State of Mew York.

Sec. 7. At any meeting of the Board of Directors, a
majority of the whole number of Directors shall constitute
a lav/ful quorum for the transaction of business ; but in
the event of a quorum not being present, a less number may
adjourn the meeting to same future date as those present
may' deterndne .

At all meetings of the Board of Directors, each
Director is to have one vote, irrespective of the number of
shares of stock of this Company that he may hold.

At any meeting at which every member of the Board of
Directors shall be present, though held without notice, any

■business may be transacted which might have been transacted
if the meeting had been duly called.

A special meeting of directors my be called by any
one director upon one day's notice. Said notice may be
sent either thr: ugh the mil to the last known post-office
address of the directors or by telegraph or telephone or
given verbally.

Sec. 8. The directors need not be stockholders.

Sec. 9. The President and treasurer shall constitute
an executive committee to conduct the affairs of the c ompa-
ny between meetings or the Board of Directors.

Article III.

OEBTCHRS

Sec. 1. All officers and agents of the company shall
be special agents, and their power shall be limited ex¬
clusively to the authority granted them by these By-Laws,
or to the further authority granted them by the Board of
Directors, in accordance with its pov/ers, in x>urstiance 0f
resolution theretofore adopted.

Sec. 2. The officers of the company shall be a Presi¬
dent, a Treasurer and a Secretary, but the person holding
the office of Treasurer may also hold that of Secretary.

The President, shall be a director of the Corapary .

Sec. 3. The officers of the Company shall be chosen
annually by the Board of Directors immediately after the
election of each new Board and shall hold office until

15,

their successors are duly chosen and qualified.

Sec. 4. Any oiiicer may be removed, either with or
without cause, and his successor elected at any regular
meeting oi the Board provided not less than two Directors
vote in favor of such removal.

Artivle IV.

P3IESIDE3TT

The President shall sign all certificates of stock,
preside at all meetings of stockholders and Board of
Directors, and shall do, perform and render such acts and
services as the Board of Directors shall prescribe and
require .

Article V.

SECRETARY

The Secretary stall countersign all certificates of
stock, be the custodian of the seal of the corporation, ard
affix the s ame to all certificates of stock, papers and
instruments requiring such seal; he shall keep the minutes
and recordd of this corporation, the book3 prescribed by
the statutes of this State, and such other books as the
directors may require to be kept by him. He shall attend
all meetings of directors and stockholders and render
such other services as the directors my impose upon him.

Article VI.

TREASURER

The Treasurer shall perform such duties a s the

15.

Directors may impose ui>on him. He shall report the state
of the finances of the corporation at each monthly meeting
of the Directors, and at each annual meeting of the stock¬
holders. He shall hold his office at the pleasure of the
Directors, and may ha r amoved whenever they determine upon
such removal. He shall, if required hy the Board of
Directors, give to the Company such security for the
faithful discharge of his duties as the Board of Directors
may direct.

Article VII.

Should any vacancy occur in any office hy death, re¬
signation of otherwise, the same shall ha filled without
undue delay hy the Board of Directors, at a special or
regular meeting.

Article VIII.

• INSPECTORS OP ■ELECTION.

Two Inspectors of Election shall he elected at each
annual meeting of stockholders to serve for one year, and
in the case of the refusal or inability of either or all
of them to act, or his or their absence at the time of
election, the meeting may appoint another or others to act
in his or their place. But the Inspectors of the first
Election of Directors and of all previous meetings of the
stockholders shall he appointed hy the Board of Directors
named in the certificate of incorporation. Ho Director
shall he eligible to electionas Inspector. Every Inspector

16.

shall, before entering upon the discharge of his duties,
he sworn to faithfully execute the duties of Inspector at
such meeting with strict impartiality and according to
the best of his ability, and such oath shall be subscribed
by him and immediately riled in the office of the Clerk
of the County in vihich such election or meeting shall be
held with a certificate of the result of the -rote taken
thereat, as provided by Section 28 of the Stock Corporation
law. An Inspector need not be a stockholder.

Article IX.

AUDIT COMMITTEE

The Board of Directors shall appoint annually one
of its members as an Audit Committee whose duties shall be
to audit the accounts of the Treasurer previous to the
annual -meeting and at such times as the Board of Directors
may authorize .

Article X.

THE SEAL

The seal of the Corporation shall be as follows:-

IB.

Article XI. i
CERTIFICATES OF STOCK

Sec. 1. The certificates of stock shall he numbered,
and registered in the order in which they are issued. They
shall he hound in a hook and shall he issued in consecutive
order therefrom and in the margin thereof shall he entered
the name of the person owning the shares therein represent¬
ed, with the number of shares and the data thereof.

Such certificates shall exhibit the holder's name
and the number of shares. They shall he signed by the
President and countersigned by the Treasurer and sealed
with the seal of the Company.

Sec. 2. The stock of the corporation shall he assign¬
able and trans f errahle on the hooks of the Company only by
the person in whose name it appears on said hooks or by
his legal representatives. In case of transfer by attorney
the pover of attorney duly executed and acknowl edged shall
he deposited with the Secretary. In all cases of transfer
the former certificate must he surrendered up and cancelled
before a new certificate is issued, and such cancelled
certificate pasted in the certificate book to its proper
stub .

Ho transfer shall be made upon the books of the
Company within ten days preceding the annual meeting of
shareholders .

Sec. 3.’ If the holder of any stock shall lose the
certificate thereof, he shall immediately notify the Cornpa-

ny of the facts and the Board of Directors may than cause
a new certificate to he issued to him subject to the ds-
posit of a hond in such form and with such sureties as the
Board may require.

Article XIX.

BILLS, BOTES, etc.

All hills payable, notes, chec3cs or other negotiable
instruments of the Company shall he made in the name of the
Company and shall he signed by the Treasurer and counter¬
signed by the President.

No officer or agent of the Company, either singly or
j ointly with others, shall have power to make any hill
payable, note or check or other negotiable instrument of •
endorse the same in the name of the Company, or contract or
cause to be contracted any debt or liability in the name
or on behalf of the Company, except as specially authorized
by the Board of Directors.

Article XIII.

AttEBDIffiNTs/

These, by-laws may be altered, amended or added to by
a majority vote of the directors at any meeting or by a
majority vote of the stockholders at an annual meeting.

Any by-laws adopted by the Board of Directors regulat¬
ing the election of directors or officers slall not be
valid unless published for at least once a week for two
successive weeks in a newspaper in the county where the
election is to be held, and at least thirty days before

such election.

On motion duly made, seconded and carried, it was

RESOLVED: that the Company proceed to carry on the
business for which it was incorporated.

Mr. Henkel then offered the following preamble and
resolution which, after being discussed at length and fully
considered, was duly seconded and unanimously carriad.

WHEREAS,. Martha Virginia Douglas has been carrying
on for a number of years last a business in the City of Hew
York in the name of Douglas & Co., and

WHEREAS, on the 25th day of October, 1S04, she
entered into an agreement (hereafter referred to as "THE
AGREEKEHT") with the national Phonograph Company as fol¬
io ws:

f®IORAHDUK OP AGREEMEHT entered into this 25th day
of October, 1904, by and between MARTHA VIRGIHIA DOUGLAS
of East Orange, Hew Jersey, party of the first part, and
HATIOHAL PHOHOGRAPH COKPAHY, a Hew Jersey corporation,
party of the second part.

WHEREAS, the party of the first part has for a number
of years been carrying on a business in the City of Hew
York, State of Hew York, under the name of Douglas & Co.,
and

WHEREAS, as a result of carrying on the said business
she has become indebted in a large stun to the said national

20.

Phonograph. Company, and

WHEREAS , the party of the first part is desirous of
securing further time for the payment of the s aid indebt¬
edness, and for fat purpose it being deemed advisable- to
re-organize the said business of Douglas & Co.y: and
WHEREAS, the ITational Phonograph Company is only
willing to extend time for the payment of the said in dsb-
tedness upon the conditions hereinafter stated,

HOW THEKEPORE, upon the consideration of One Dollar
in hand paid from each party to the other, the recei pt of
v/hichf r am the other is by each party acknowledged, and
upon other good and valuable considerations moving from
one party to the other, it is hereby agreed as follows:

The party of the first part agrees to forqi or cause
to be organized forthwith a corporation under the lavra of
the State of Hew York, to be styled "Douglas Phonograph
Company" or some other appropriate name; the capital stock
to be Twenty-five thousand dollars and divided into shares
of one hundred dollars each par value.

The party of the first part agrees to subscribe, or
cause to be subscribed for, fifty shares of the said stock,
the same to be paid for in cash at par, at the commencement
of business, said $5000 not in any my to come out of the
present assets of Douglas & Co. --which are not to be dimin¬
ished — but to be entirely new and additional capital for
the running of the business.

The party of the first part also agrees to sell at

21,

the sane time all of the assets of every nature whatsoever
of Douglas & Co., including the good will, trade marie,
trade names, patent rights and license rights under the
same, leases and interests in real estate, clioses in ac¬
tion, accounts and hills receivable, cash on hand, etc,
etc. t,o the said proposed new corporation, for the remain¬
ing twenty thousand dollars worth of stock; the said nev/
corporation to assume all the liabilities of Douglas & Co.

The party of the first part agrees to cause the
proposed new company, as soon as it is organized, to exe¬
cute and deliver to the national Phonograph Company its
promissory notes in the aggregate sum of her total indebt¬
edness to the national Phonograph Company as of the date
November 1st, 1904; each note to bear interest at six per
cent per annum, and in such amounts and payable on such
dates as the National Phonograph Company shall designate,
the last of said notes, however, to he due and payable
at most, three years from the date hereof; each of said
notes also to he endorsed by the party of the first part.

The party of the first part will endorse in blank
and deliver all of her shares of stock in the nev; company
to the National Phonograph Company, it being the intent and
purpose that the said National Phonograph Company shall
hold the said shares of stock as security for the said
notes until all of the s ame have been duly paid; it being
understood that the said National Phonograph Company, if it
so elects, shall have the same transferred to its owm name

on the hooks of the Company or in the name of whosoever
it may d esignate , and in all respects have the right to
the voting X'Ower thereon. Should there be any default
in the payment of any of the said notes, then the said
stock my be sold at private sale without notice,

Y/hen all of the said notes have b--en duly paid, as
aforesaid, the National Phonograph Company shall then forth
with re-assign or cause to be re-assigned, the said shares
of Btock to the said party of the first part.

No dividends shall be declared or paid by the proposed
new company until all of the said notes d’-e the National
Phonograph Company, as aforesaid, have been duly paid.

The said proposed new company will pay the party of
the first part Pifty Dollars a week in lieu of all services
rendered, so long as the said National Phonograpgh Company^
notes are duly met.

The party of the first part agrees that she will not
part with her title or interest in and to any of her shares
of stock in the said company so long as any of the said
notes due the National Phonograph Company, as aforesaid,
remain unpaid.

Should there be any default in the payment of any of
the said notes, then the National Phonograph Company may,
if it so elects, declare all or any of the remaining un¬
paid notes forthwith due and payable .

It is the understanding of this agreement that the
National Phonograph Company in no my assumes any liability

23.

for any of the acts or omissions of the proposed new com¬
pany.

IJT WITJTE88 W7IEKEOJ1, the parties hereto have set their
hands and seals the day and year first above written.

Martha Virginia Douglas (SEAL)

KATIOHAL PHO’TOGRAPH COMPANY,

WIT'TESS!

William Pelze r.

By W. E. Gilmore,

President.

WHEREAS , the said Martha Virginia Douglas has
offered to sell this company the assets of every nature
whatsoever of Douglas & Co., as aforesaid, for §20,000
of the full paid and nen-assessible capital stock of this
company, provided this company agrees to assume the condi¬
tions and obligations imposed upon it by the said "AGREE¬
MENT " and

WTEREAS, it was the intention of the incorporators
of this company, among other thingd, to purchase and take
over and carry on the said business of Douglas & Co., ad
stated in the said agreement, and

WHEREAS, it appears, after due consideration and
investigation that it is necessary and advantageous and
for the best interests of this company that it acquire,
purchase, take over and carry on the said business of
Douglas Sc Co., as aforesaid, and that the consideration
mentioned is fair value of the business and assets porposed

24.

to be sold and transferred to this company,

NOW TKTOKEI’OKE, BF; IT KF SOLVED that 'this company do
purchase the business, property and rights mentioned and
set forth in the aforesaid fl AGREEMENT" for the price
therein mentioned, and to that end to accept in all its
terms and conditions the aforesaid proposition and offer
of Martha Virginia Douglas, and that the aforesaid propo¬
sition together with a copy of this resolution he referred
to the Board of Directors, and we hereby authorize and
instruct our said Board of Directors to perfect the pur¬
chase and acquisition of said business of Douglas & Co.,
as aforesaid, and cause to be issued therefor in the proper
form, pursuant to the laws of the State of Mew York,

§20,000 stock of this company, par value, full paid and
non-assessable, providing that the judgment of the Board
of Directors of this company concur in our opinion of the
value of the property to be purchased.

Approval of On motion duly made, seconded and carried, the
Minutes .

foregoing minutes were then and there read and approved as
and for the minutes of this meeting.

On motion duly made, seconded and carried,

THE HEM TING ADJOURNED.

25,

Authentication

of Minutes I, Martha Virginia Douglas, the Chairman of the

foregoing meeting, and. 1, Chas. V. Henkel, the Secretary
thereof do hereby certify that the foregoing is a true,
full and accurate statement and record of all the acts
and things done thereat.

Dated the first day of November, 1904.

Martha Virginia Douglas - Chairman
Chas. V. Henkel, - Secretary.

26.

AUTHENTI PICATIO ?T 01’ CEETmOATE 01’ INCORPORATION
OS’

DOUGLAS PHONOGRAPH COMPANY

Authentifi- This is To Certify that on the 25th day of October,
cation of

Certifi- A. D., 1904, the persons hereinbefore named as subscribers
cate of In¬
corpora- to the Certificate of Incorporation desiring to become a
tion.

body corporate in accordance with the laws of the State of
New York, under the name and style of

THE IOUGJAS PHONOGRAPH COMPANY
with all the corporate rights, powers and privileges enjoy¬
ed under or by such lav/s did make, subscribe and acknow¬
ledge in due form the Certificate of Incorporation hereto¬
fore. recorded on pages 17 to 21 of this book, which Certi¬
ficate of Incorporation with the Certificate of acknowledge
ment thereunto attached was duly filed and recorded in the
office of the Secretary of State, of the State of New York,
on the 28th day of October, 1904, and a dux>licate original
of the same, in the office of the Clerk of the County of
New York, on the 29th day of October, 1904.

, IN V/ITNESS WHEREON, the original subscribers to the
said Certificate of Incorporation for the purpose of authen
tification of this record have hereunto subscribed their
names and caused the corporate seal to be hereto affixed
this first day of November, 1904.

( SEAL) Martha Virginia Douglas

Edward E. Pranchot

Chas . V. Henkel

27.

MINUTES OP PIRST MEETING OP BOARD OP DIRECTORS OP
DOUGLAS PHOTOGRAPH COMPANY

MINUTES oi“ the Pirst Meeting of the Board of Directors
held at the office of the Company, 290 Broadway, in the
City of Rev/ York, Borough of Manhattan and State of Hew
York, on the first day of Hovemher 1904, at three o'clock
in the afternoon.

Present: Mrs. Martha Virginia Douglas
Mr. Charles V. Henkel
Mr. Pdward E. Pranehot.

being all of the directors named in the Certificate of In¬
corporation of the Douglas Phonograph Company.

Upon motion duly made, seconded and carried, Mr.
Edward E. Pranehot was nominated and elected Temporary
Chairman.

Mr. Pranehot thereupon accepted the position of
Temporary Chairman and acted as such until relieved by the
President.

Upon motion duly made, seconded and carried, Mr.
Charles V. Henkel was nominated and elected Temporary
Secretary.

Mr. Henkel thereupon accepted the position of
Temporary Secretary and acted as such until relieved by the
Permanent Secretary.

The Chairman then requested the Secretary to read the
list of directors for the first year as set forth in the

28.

Certificate oi Incori>oration and the following was the list
lira. Martha Virginia Douglas
Mr. Charles V. Henkel
Mr. Edward E. Eranchot

The Secretary then presented and read to the meeting
a waiver of notice of meeting subscribed by all the direc¬
tors mentioned in the Certifi cate of Incorporation.

Upon motion duly mads, seconded and carried, it was

RESOLVED, That the sail® be ordered on file, and the
Secretary be requested to cause the stone to be spread at
length upon the minutes.

WAIVER OE HO TICE OE EIRST MEET! KG OE DIRECTORS.

WE, THE UHDKRSIGTTBD, being all the Directors of the
Douglas Phonograph Company, Do hereby waive all notice
whatsoever of. the first meeting of the Board of Directors
of the said Company and do consent that the first day of
Hovember, 1904, at two, o' clock in the afternoon, be and
hereby is fixed as the time and the office of the Company,
at 290 Broadway, in the City oi Mew York, Borough of Man¬
hattan, State of Hew York, as the place for holding the
same and that all such business be transacted thereat as
may lawfully come before said meeting.

Dated, the first day of Hovember, 1904.

Charles V. Henkel
M. V. Douglas
Edvard E. Eranchot,

29.

The Secretary then called the roll and all the
directors or the Company were found to he present.

The Chairman thereupon stated to the meeting that
there was a quorum present thereat as required hy the by¬
laws .

On motion duly made, seconded and carried, it was

RESOLVED, that the Board then proceed to the bus in ess
of the meeting.

The Secretary then present'd and read to the meeting
the minutes of the first rase ting of the Incorporators and
Stockholders held on the first day of November 1904 at
two o'clock in the afternoon, at the office of the Company.

Upon motion duly made, seconded and carried, the same
were in all respects ratified, approved and confirmed.

The Secretary then presented and read to the meeting
the by-laws adopted at the said meeting of the shareholders

The same were taken up clause by clause, discussed,

and

Upon motion duly made, seconded and carried the same
were in all respects ratified, confirmed and approved as
and for the by-laws of the Company.

Upon motion duly made, seconded and carried, it was

RESOLVED, that the meeting proceed to the election of
the officers for the ensuing year.

The Chairman then stated that iib accordance with the
by-laws a President, Secretary and Treasurer of the Company
were to be elected, and that nominations for President we re

30.

in order.

Hr. Henkel nominated for President Mrs. Hartha
Virginia Douglas, vh ich nomination was seconded by Mr.
Pranchot .

Mrs. Douglas then retired from the room and took no
part in the business of the meeting until her return as
noted in these minutes.

On motion duly made, sec aided and carried, the nomina¬
tions were declared closed, and there being no other nomi¬
nees it was moved, seconded and carried, that the Secretary
of the meeting be requested to cast one ballot for Mrs.
Douglas, Which he did. The Chairman thereupon declared
Mrs. Douglas unanimously elected President of the Company
for the ensuing year.

Mrs. Douglas then returned to the room, was notified
of the action of the Board, and she thereupon accepted
the office of President and entered immediately upon the
discharge of her official duties.

Mr. Pranchot thereupon resigned the chair which Mrs.
Douglas who presided for thj remaindar of the meeting took.

The Chair then stated that nominations for Secretary
were next in order.

Hr. Pranchot nominated Mr. Charles V. Henkel for
Secretary which was seconded by Mrs . Douglas.

On motion duly made, seconded and carried, the
nominations were declared closed, and there being no other
nominees it was moved, seconded and carried that the Secre-

31.

tary of the meeting he r -quested, to cast one hallo t for
Mr. Charles V. Henkel, which he did.

The Chairman then declared Mr. Charles V. Henkel
unanimously elected Secretary of the Company for the ensu¬
ing year.

Mr. Henkel thereupon accepted the position of
Secretary and entered immediately upon the discharge or his
official duties.

The Chair then stated that nominations for Treasurer
were next in order.

Mr. Pranchot nominated Mr. Charles V. Henkel for
Treasurer, which was seconded hy Mrs. Douglas.

On motion duly made, seconded and carried, the
nominations vers declared closed, and there being no other
nominees it was moved, seconded and carried, that the
Secretary he requested to cast one ballot for Hr. Charles
V. Henkel, which he Aid.

The Chairman thereupon declared Hr. Charles V. Henkel
unanimously elected Treasurer of the Company for the ensu¬
ing year .

Mr. Henkel thereupon accepted the position of Treasur¬
er and entered immediately upon the discharge of his offi¬
cial duties.

On motion duly made, seconded and carried, the follow¬
ing resolution was adopted:

KKSOLVED, That the Treasurer he and is hereby direct¬
ed to execute and deliver to this corporation within thirty

32.

days from the date of this meeting: a bond in such sum and
v/ith such surety or sureties to he approved hy this Board
conditioned that he will faithfully account for all moneys
, belonging to the Company that may come into his hands as

such Treasurer, and that he will faithfully perform the
duties of his office as required hy the Board of Directors
and the hy-laws of this corporation.

On motion duly made, seconded and carried, it was
RESOLVED, That the Treasurer he authorised, empov/ere d
and directed to open an account in the name of the Company
with the Irving Rational Bank, City of New York, in
the Cottnty of New York, New York, to deposit therein all
funds and moneys belonging to the Company and to withdraw
the same or any part thereof, hy means of checks signed hy
him and countersigned hy the President.

Upon motion duly made, seconded and carried, it was
RESOLVED, That the third Monday of each month he
fixed as the day upon which the regular monthly meeting
of the Board of Directors of this Company would he held
during the ensuing year, at two o’clock P. M.

The Treasurer acknov/lediged the receipt of Five
thousand dollars (§5000), the same being in payment of the
subscriptions as set forth. in the Certificate of Incorpor-
C ) at ion .

Upon motion duly made, seconded and carried, it was
RESOLVED, that the Company hy its President and Treas¬
urer issue certificates of stock in the name of the Com-

pany to the subscribers dssignated in the Certificate
of Incorporation.

The Board next to oh up the matter of the offer of
Mrs. Martha Virginia Douglas to sell to this company the
business assets, etc. of Douglas & Co., and the matter
having been taken up and discussed at length, upon motion
duly made, and seconded the following preamble and resolu¬
tion was unanimously adopted:

V/HRKBAS, a resolvition was duly passed at the meeting
of the stockholders of this company held on the 1st day of
November 1904, accepting all the terms and conditions of a
cefctain proposition and offer made by Mrs. Martha Virginia
Douglas, for the sale and transfer of the business of Dou¬
glas & Co., upon the terms and conditions therein set forth
and by Which resolution the directors were authorized and
instructed to accept the aforesaid offer and to purchase
and acquire the aforesaid property and to pay for the said
property the fair value of the property so transferred, as
aforesaid, by the aforesaid proposition and offer, in the
full paid stock of this company, providing in the jud gment
of the Board of Directors, t.he said price of $20,000 was a
fair valuation thereof, to which proposition and offer and
resolution of the stockholders reference is hereby made,
and the same are to be considered as if they were set forth
at length on these minutes; and

WHEREAS, in the judgment of this Board of Directors
after careful examination and fair appraisement, this Board

54 .

is unanimously convinced that the said property is neces¬
sary and advantageous for the business of this company,
and that the fair value thereof is the amount at par of the
stock projiosed to he issued in payment thereof.

HOW THEKEPOKE, BB IT RESOLVED, that in accordance
with the provisions of the said resolution of the stock¬
holders and in accordance with the judgment of this Board
of Directors, this Company do accept the aforesaid proposi¬
tion and offer of Martha Virginia Douglas and do purchase
of her all the assets of every nature whatsoever of Dou¬
glas & Co., including the good- will, trade-marks, trade
names, patent rights, license rights under the same,
leases and interests in real estate, closes in action,
accounts and hills receivable, cash on hand, etc. for the
sum of Twenty thousand Dollars (§20,000) to he paid for
by the issuance of full paid capital stock of this company
at par value of §20,000, and the President and Treasurer
of ihis Company are hereby authorised, empowered and direct
ed, upon the delivery of said property and the execution
of the proper legal instruments necessary to convey and
transfer said property, to issue and deliver in accordance
with this resolution, the full-paid dtock of this Company
to the amount of Twenty thousand dollars (§20,000) , being
200 shares of the par value of §100. eachjji in payment
thereof.

The Treasurer reported receipt by him from Mrs.

Douglas of a bill of sale covering the property mentioned

35.

in the foregoing resolution.

Upon motion duly mads, seconded and carried, it v/as
unanimously

VOTED that the said report be accepted.

Upon motion duly made, seconded and carried, it v/as
RESOLVED, that the Certificate of the Capital Stock
of the Company be in the follov/ing form;

Certificate Ho. -

Ror - -Shares

Issued for- - — —

Dated - 190 —

Issued to -

INCORPORATED UNDER THE LAWS OR THE STATE OR
HEW 10RH

CAPITAL STOCK #25,000
Humber Shares

DOUGLAS PHONOGRAPH COiJPAHY
S THIS IS TO CERTIRV that- — . if the

Received the above

Certificate - -

- - - 190—

Certificate Ho. -

►hK owner of - - 3hares of the C

j~j [g Stock of

' A DOUGLAS PHONOGRAPH C01IPA75Y

transferrable only on the books of i
1 "*pany by the holder hereof in person

Com-

Cancelled - 190 —

Certificate Ho. — is¬
sued in its place—

< duly
“♦-3 this

■190—

authorized Attorney upon surrender of
Certificate properly endorsed.

IH WITNESS 'WTEREOR this Certifi¬
cate has been prepared by the Directors
and the said corporation has caused the
same to be signed by its duly authoriz¬
ed officers and to be sealed with the

seal of the coloration this - day

of - A. D., 190 -

Treasurer,

President,

Upon motion duly made, seconded and carried, it was
RESOLVED, that said certificates ha endorsed as
follows:-

Jor value Reoeivsd - hereby sell, assign and transfer unto

the Shares of the Capital Stock represented by the
within Certificate, and do hereby irrevocable constitute

and appoint-- . . . . Attorney

to transfer the said stock on the Books of the within
named Company, with full power of substitution in
the praises,

DATED - 190 -

In Presence of

ITOTICE: The signature to this 'assignment must cor¬
respond with the name as wfcitten upon the face of the cer¬
tificate, in every particular, without alteration or en¬
largement or any change whatever.

37.

Upon motion duly made , seconded and carried, the
masting adjourned.

TTilS IS TO CERTIIY that I Edward 70. SVanchot and I
Martha Virginia Douglas, the tempo rary and permanent
Chairmen respectively at Hie above meeting, and I, Charles
V. Henkel the temporary and permanent Secretary respec¬
tively thereat, have read the foregoing minutes of the said
meeting and the same are in all respects a full, true and
accurate record of the proceedings thereat.

Dated, the first day of Movember, 1904.

Temporary Chairman Permanent Chairman

Edw. E, Eranchot Martha Virginia Douglas

Temporary and Permanent Chairman

Charles V. Henkel

38.

KNOW ALL HEN BY THESE PRESENTS, that in oonsicfe ration
oi- Twenty thousand dollars ($20,000) of full paid and non¬
assessable stock, xiar value, of the Douglas Phonograph
Company, the receipt of which is hereby acknowledged, I do
hereby grant, sell, transfer and deliver unto said Douglas
Phonograph Company, its successors and assigns, the follow¬
ing goods and chattels: All the assets of every nature
whatsoever of Douglas & Co., including the good will, trads
marks, trade names, patent rights and license rights under
the same, leases and interests in real estate, choses in
action, accounts and bills receivable, cash on hand, etc.
the items of which being more specifically set forth in
the exhibits hereto attached.

TO HAVE AND TO HOLD all and singular the said goods
and chattels forever. And the said grantor hereby cove¬
nants with said grantee that she is the lawful owner of
said goods and chattels; thajr they are free from all in¬
cumbrances except as stated; that she will warrant and de¬
fend the same against the lawful claims and demands of
all persons whomsoever.

1ST WITNESS WHERE OP, the said grantor has hereunto
set her hand this 1st day of November, 1904.

Martha Virginia Douglas (SEAL)

WITNESS:

P. E. Bridley,

• DOUGLAS PHONOGRAPH COMPANY*
PRESIDENT'S REPORT

'for tho year ending October 31st, 1906;

The gonoral business for the year while showing an incroaso
j of about -548000,00 over the previous year, novortholoss it is not what might
| have boon oxpooted.

First i

Several reasons may bo assignod for thoso conditions.

wince July 1st, 1906 tho Viotor Talking Machine Company havo
refu3od to supply us with goods for tho roason that our Company have refusod to
sign tho new contract submitted by the Victor Talking Machine Company. The
failure to reooivo Victor goods very materially docroasod our sales, not alone
! we -Loso 'the sal° Viotor goods, but in addition, 3alos of Edison and
other goods, for roasons which are quite obvious. Every offort has boon made
to purchase Victor goods but not with any. degree of success, and such goods as
wo have boon able to purchase wore at dealers prices, causing a resulting loss
jj in profits.

| Socond:

jj Competition has booomo vory keen and while our Company has be-

I oomo more conservative with roforonco to credit, our competitors havo become
jj more liberal, with the result of loss in businoss to us.

| In addition businoss has not boon as active as it might be,

| and gonoral trade reports verify this statement.

!; Profit for tho yoar.

I In proportion to the amount of business dono, wo havo not

made as good a showing for the yoar 1906 as compared with the year 1905.

I I Ho comparison can bo made at this time for tho roason that

contain deductions may bo made from tho figures submitted by our Treasurer.
Anothor factor to be considered is the loss sustained by the reduction in prioe
in Viotor goods, Dooember 1st, 1906, roduoing tho value of our assots and in
addition from December 1st, 1905 to March 1st, 1906, Viotor 7-10-18 rooords
wore sold at cost.

Extension of business.

Tho net earnings of tho Newark Branch do not perhnps show the
actual profit to the Company, from this source.

Considorablo business is no doubt diverted to the How York
house, whioh wo might not receive if tho Newark Branch did not exsint.

Furthermore all Viotor goods havo boen charged to Newark
Branch at 40/10# and other supplies at an advanoo of 5# over our own oost. In
addition to whioh Disc Records other than Viotor wero sacrificed owing to the
I cut in the price of Victor goods.

#2.

It is imperative to increase our Retail and Installment
bueinooB and porhnps establish additional stores for the purpose.

Victor Suit.

V.'e have instituted suit against the Victor Company for
$100000 damages and the somo is being prosecuted as rapidly as possible.

Increase of Capital.

Tho Capital Stock has boen increased to $150000 - $75000 pre¬
ferred and $7 5000 common, as authorized by tho Stockholders.

General.

Tho future of the Company is vory oncouraging and with the
additional capital a much largor and more profitable business should result.

DOUGLAS PHOtTOORAPI! COI.’PANY.

|i , , Treasurer's roport for yonr ending October 31st, on tho ncoountn

ij os thoy appear on thnt date.

Balance lihcot - Hhodulo A.

Herewith shows ■tho Assets & Liabilities as thoy appoar in *ho Priv-
ate Lodger, oubjoct to ouch doprooiation or reduction ao tho Board of Directors?
r.ay decide upon.

ASSETS.

: Aocounto Rocolvnblo:

Show a total outstanding amounting to
practically all good and colloctablo, all doubtful
I accounts having boon writ' on off to oithor Bad Debt
;; Accounts or SuBpondod Acoounto. No dotailed Schedule
|| is nubmittod an tho data ia all contained in tho Trial
:j Balunco Book.
i| Bills Receivable:

Represents notos given by customers and not
!j discounted at Bank, amounting to

! Those notes aro shown in detail in schedule A 1, together
I with a list of notos discounted, which represents a contingent
| Liability of "7676.30.

| Oash Account

Shows a balanco in hand of 14,243.65

as follows:

! On Deposit Cormunia Bank $9680.07

" Fidelity Trust Co. 1069.97

| " Washington Trust Co. 2000.00

013648.04

I Potty Cash in Hand 696.61

A summary o r the Cash Account ohonn in detail in
Schedule A 2.

1126,690.66

282.52

Amount forward

$41,116.73

Hov. lot, 1906. Inoroaoe Oot. 31,1906.

| Hon York 5X3,061.17 96,679.17 66,730.34

! Nonark 8,690.40 1,334.98 7,986.49.

[Total _»41,671.67 94,344,19 66,016,76

I* The total for Hovambor lot, 1906, ropreoonto 8jS
doductod by order of tho Board of Dirootoro.

The Invontory figures aro very conservative and rep-
j resent aotual valuoo - all old or questionable goods
[being entirely elininatod. In addition' the supply of
;! Office Stationery & gonoral advertising matter hns not
; boon conoiderod.

Tho abovo Assets represent available or quick Assets

Hov. lot, 1906. Addod for Yoar Oct. 31, 1906.
Hon York 4,916.48 1,806.91 6,723.39

jj Henark 640.18 104.34 ‘ 744.62

Total *56,666.06 51,911. 96 87,467.91

I *The total for November lot io loss 6j4
jj depreciation from aotual figuroo and tho
]! Oot. 31st, balance is subject to tho action of the
jj Board ofl Directors in this respect.

it nhioh the

ASSETS CONTINUED.

(?)

Account Forward

!j I.:. V. Douglas "Speoial"

Thia represents tho amount paid t'.y.D.

I' to date on aocount of an arrangement to pny her 1(10,000
[ at i(50 per week. Some plan ehould be eugRoated to
| properly treat theao payments Either add tho name to
ji Oood Will or oonoidor the aocount ao an Expense.

;i Suspended Aooounts

Represent Doubtful Aooounts. Receivable,
transforrod for oonvenionoo Sohodule A 3, givos these
; aooounts in detail, with remarks as to possibility of
I oolleotion etc.

|: The above represent Capital Assets and amount to
: a total of

(*87,407.91

8,881.88

[ LIABILITIES

j '

j Aooounts Payable;

; Theso accounts are detailed in the

ji Trial Balance Book. A short summary is as follows:.
Duo National Phonograph Co. $58,987.94

" Sundry Creditors 6.857.80

It6f.845.74

Sundry Accounts aro being discounted.

Bills Payable:

Duo Rational Phono. Co.

16>100.00

I There aro no othor notos mado by the Company unpaid.

i Edison 8/1 Exchange Acct.

Roprosente our liability to customers
for reoords roturned by them on tho Exohange Plan,

■ and for which the Natl. Phono. Co. have allowed ub
! credit

1,476.86 ’

The abovo accounts represent the Actual

Liabilities and amount to

#88,880.99

Capital Aocount

#86,000,00

Surplus Aocount

13,607.91

Profit & Loos for year

17,743.38 .

Capital & Surplus

#66,351.89

LIABILITIES CONTINUED.

|| A summary of tho Assets & Liabilities ohow tho following!

|! Available Assets
|i Actual Liabilitioa
! Excess of Acaeto

S Capital Assets 366,381.89

" Liabilities 38.039.79 _

| 1
PROFIT ft LOSS.

Schedule B A* C.

; Income;

Tho totnl income for both flow York &

| Newark amounted to as followBj

|| Non York - Schedule "B" 3882,177,33

jj Newark - * "C" 26.879.06

3107,132.49
82,820.99
3 3,4,311.80

a4.311.60.

3308,066.39

Charges;

Purchases

The total Purchases for tho year amounted
to 3234,432.07

As follows:

Non York - Schedule "B" 1 -3214,348.89
Nenark " "C" 1 20.083.18

Showing a Gross Profit of* 3 73,624,32

Expenses for tho year amount to 65,880.94

As follons:

New York Schodule B 2, 381,098.92

Newark * C 2, 4,782.02 _ _ _

Net Profit for tho year fl 17,743.38

As follows:

Hew York - Schedule B 16,729.62

Newark * 0 1,013.86 _

Tho new issue of Preferred Stock has been subBoribod and
paid for, amounting to 376,000, and the National Phonograph Company's
indebtedness has been liquidated.

Legal Department Records
Phonograph - Correspondence

Foreign Copyright

This folder contains correspondence and other documents relating to
musical copyright matters in Great Britain, Germany, and other countries. The
selected documents cover the period 1908-1909. Among the correspondents
are Paul H. Cromelin and M. Dorian of the Columbia Phonograph Co. and
Horace Pettit of the Victor Talking Machine Co. The documents pertain to
copyright provisions in British law and under the Berne Convention of 1886 and
to cooperation between the National Phonograph Co. and its competitors,
Columbia and Victor, on the foreign copyright issue. Included is a report by M.
Dorian prepared for the Berlin Conference for the Revision of International
Copyright Laws in October 1908, as well as a printed copy of Frank L. Dyer's
testimony before the British Parliament.

Approximately 20 percent of the documents have been selected. The
items not selected include printed reports, proposed legislation, and documents
that duplicate information in selected material.

r.m.s.“lusitaniaV

Sept. 21a t, 190ft.

Philadelphia., Ponn.

Dear Mr. Pettit,

Aa proposed by you and Mo aero. Oyer unci O'Connell aji
our recent conference, £ have p{iven rauoh thought to the bent course
to purovio with reference to tho Internut ionul Copyright Conference
which will auoerablc in Berlin Oct. 14th. I have had a good oppor¬
tunity on board steamer to review all the correspondence with our
European Officials and to consider conditions aa they exist in re-*
speot to the Mechanical Reproducer problem in its relation to Authors
and Ooapoenr* a rights in the various onuntrieu of the world.

All Of un. I believe, fully appreciate! the f uot that
whasorvax* is done at Berlin Mill be of greatest importance, in shaping
and perhaps determining the course of future legislation in the
United States and olzanhere. I am convinced that our efforts should
be directed towards strongly opposing any change in tho principle
established by Article 3 of the Berne Convention of 1036', expressly
granting freedom of reproduction. The reaintainanoe of this princi¬
ple and its re- Affirmation at this time is of greatest importance to
each und every manufaoturer of acohanioul musical instruments. So
those Ann v loan firms engaged in un export trade and who may be' es¬
tablished either directly or through dealers in foreign countries,

Ate naintainoneo in perhaps of ."fraver moment than to those others
who may for the present oonfino their efforts to the development of
the Homo Market only.

Sailing in this, our efforts should be directed to
scouring a declaration in favor of kotos fair and equitable universal
Royalty arrangement, and beyond this under no airouaafcaaaua should
we be willing to go.

It will ba an important victory if we con block any
notion whatsoever in tho coming Conference a*s regards meohanioal
reproducers permitting matters to remain as they are at present. It
will be infinitely superior work if wo oan secure from the Conference
a re-affirmation of . the Berne principle of l«£6. it will bo a vic¬
tory still, if a doolaration in favor of universal Royalty (is~wedured.
for the interests baok of all this agitation and whose influence has
resulted in tbs ooming Conference are not seeking nor will they be

satisfied v/ith any suoh result. They will leave no atone unturned
in 'behalf of the"poor composers?',1 to aeoure full and complete. pro¬
tection against reproduction' by means of mechanioul instruments.

It seemB to me, regardless of the question aa to •
whether or not the composer has any ethical right, about which there;
is room for an honest difference of opinion, that it is the duty of
all manufacturers to unite and make a mighty effort to secure four
the future a continuance of those rights which they have always en¬
joyed in the past. Unless one takes the time to stop and consider
what is going to happen under the fairest form of universal Royalty,
ones has no idea of the extent to which such a scheme will hamper arid
retard the future growth of our industries, and the almost insuper¬
able difficulties in the way of carrying out such a plan in practice.
Of one thing we may be certain; the composers will not be the real •
beneficiaries; and we have no obligation legal or ethical to the
publishers. It is not difficult for mo to picture a condition, un¬
less the matter was covered by International agreement in the clear¬
est and most express terms, where records for talking machines, per¬
forated sheets for piano players, musio box sheets and the like,
which had comjilicd with all the laws of the country in which the
manufacture took place including payment of the Royalties to the
owner of the copyright, would be subjected to the liability of con¬
fiscation in other countries unless additional payments we re made, to
the owners for the time being of the particular copyrights involved
in the country or countries to which such records v/erc shipped. The
difficulties which might confront us seem to call for the exercise
of every honest effort to prevent if possible any action at Berlin
opposed to our existing rights and to the natural healthful develop¬
ment of our industries in the future.

It is said that the coming Conference is to be purely/
diplomatic; but as it is to deal with an intensely practical com¬
mercial proposition and as we, not the altruists, academicians, and
theorists are most in interest, wc must approach the subject from a
thoroughly practical standpoint arid in ay opinion regardless of
whether we are ablo to succeed or make our influence felt, adopt a
course about as follows

I shall precede what follows by reminding you; that,
should I undertake the work it will be not because I seek'Xbut because
the suggestion comes from you and Messrs. Dyer and O'Connell, due to
the fact that X am going to be near to the scene of battle; and I
presume to Bay beoause on account of ny past connection with the
fight, severul years residence in Berlin and intimate knowledge of
copyright conditions in each of the great European countries, I may
be peculiarly suited for the mission;

1. While in England X should make it sy business to get;

in touch with all the leading interests who can be depended upon to
assist on our side of the fight and after ascertaining what has been
done so far, engage their active support in an effort to win over the
British representatives at Berlin so as to have them champion our.

2. In Oorraany, I should retain one of tho leading Coun¬
sellors especially vorcod tn the lawe respecting copyrights. There
are a few leading men who art ulwuye found in important litigation
in Berlin and one of these would ha oelootad, preferably the one the
beet pentad either because of having been connected with litigation
involving this or kindred subjectn. I am personally acquainted
with eever al of the la adore but oannot uay at thin writing who would
be etlectad until I can get .nearer to the field of operations and

«ee after considering the whole matter who it would be beet to employ -
I should arrange to 'secure ao much of hlo time as might be required
for consultation, appearance before the Ctonforonco if possible , pre¬
paration of petitions, briefs. etc. and oo-operation in th* further¬
ance of such plane as I might decide upon from the date of employment
until after the Conference adjourned,

3. I would arrange for a mooting ol‘ all the German manu¬
facturers, nuny of whom are already thoroughly aroused and would do
everything possible to stiffen up their backbones and increase their
indignation at this attack on German industries. Many of these men
are personal uaquaiutauooB and friends*

4. I would employ a secret nay for- uuuh tins ac. I might
need him capable of spooking and writing french, German and ingUsh
perfectly and who bwcatiEti of forms? aaoooiation and enviromwmt would
be able to secure audio hoc a with pore one in diplomatic cirolcu, de¬
legates to My. Conference etc.

6. I would probably find it no ce ucary to reulie a quick

trip to Swit Borland to secure th« active asHietance support and co¬
operation of the ywitsfi &«rnufau>tux*ors and Bv.ir.n dole gates to the Oon-
forenoe.

6. I would personally approach as many of the "Delegates
an could be seen prior to the neosiemu of the Gonferonct laying be¬
fore thorn our eido of the story and uolioiting their aid, co-opera¬
tion and support .

7, I would secure to the extent possible the use internee
of au much of the Ourmwi prose an could be influenced to print sui¬
ter ial favorable to our oausw.

(i. I v-uld unfit intingly entertain euoh of tho BelORatcs

newspaper men, and others, whooe influence might bo secured by good
fellowship for our side, or who might otherwise ha heljjful.

I have eetiraated that to carry cut ouch plans ae I
have proposed above, having in mind the import isr-ow of the matter at :

largely upon the publicity dnd. It cannot be done right iBor.; much

reasonably expected to do < Buc^^ork weil^ana ^ be able to

be made if at all with ^ ™derst£mding tna from V;hat Mr. Currier
accomplish our Pf’Pff** We all know tv Bg v/ill be large

and others have told us that iheaoti n i ou“d we will save

ly guided hy what is done j.n ro±. lav„Q aUTue in time and

ss'sya s»Ss‘ks '

sion X have had no time to consider j*1 jjh|ju ^ ° ^ 0*^ Musi cal” Copy-
nor to oosuminloate with the meinhei “ stake I believe that

fair to an:

Columbia Phonograph Co.

National Phonagraph Co.'

Victor Talking Machine Co.

National Piano Manufacturers ABsn.
American Musical Copyright league •
(excluding Columbia & National Cos
separately mentioned above J

#500

500

#2500

■ I

order that my movements; can _be ®de int^ g iy instructions j

ively it will he necessary for me to ha v. yo^ ^ Qnce< x suggest, |

and he put in possession of . our^Company in New York your. i

that if you approve you *«»°sit vutti o r c ^ to me through our j

S&S?3S!.?« S^S^K.“~ «» “»“f" j

W tclegtaphio «ddxo«. .ill « - *—»*, i

x» m .«* »wr y jp&vrs'ksr ;

if you decide for any reason that you do not vash ,j

**"•. I « w*«. * -JW •» «i

Albert Krell, Vice -president & Treasurer, American Musicul Copyright
league. Conner sville, Indiana.

Trusting this finds you well, and awaiting your ad¬
vices,,

Dear Mr. Dyer,

The above is a copy of a letter which I aai dispatch¬
ing to Mr. Pettit to-day. Copies have also been sent to the others
mentioned. I suggest advisability of your getting together -quickly
and will await cable advices. —

Mr^TL. Dyer,

President ,

National Phonograph Co.

Orange, New Jersey.

2VL. D.

OCT. 6-1908.

Mr. Paul H, Cromelin,

c/o Columbia Phonograph Co.,

6466 Oxford 8t. ,

London, England.

Hy dear Mr. Cromelin: ~

... . Y°ur favor of the 21st ulto. has boon received,

°^,11?in8Tjr2Ur P1?1B £or thQ Pr°P°80d trip to Berlin in connection
with the International Copyright Conference*

_ . , W11!8 w® hava never agreed as to the details of Copyright

Legislation, I certainly think there should be someone at the Con¬
ference who can represent tho Talking Machine Manufacturers, and
see that our interests are protected. Both Mr. Pettit and Mr.

0 Connell have written me that they do not approve your plans, and
have cabled you to this effect,- but I cannot agree with them.

Of oourse, if possible, any change whatever in the law Bhould be
«1>I!LH4th!4Ben^nlfnt 10 0tr°nKly against ub, I would con¬
sent to a modification that would provide for universal royalties.
While you might not wiah to go so far in committing your own com¬
pany, I wish, should you represent me at Berlin, that you would
if necessary. The withdrawal of Messrs.
nnrriL Your Plan8, may prevent them from being

effaot» tufc if y°u d0 GO, I am willing to contribute
yo^to-da^as^ollowst--90 * &° you *™P°**i therefore, I have cabled

"Pettit and 0* Connell oppose your Berlin plana. If you
oonolude to go, will contribute five hundred."

ant triti 1 wlah you muo31 8UQoeBB, and hope you are having a pleas-

Yours very truly,

President.

2 STUYVESANT.

i Cl SdUmu

FOREIGN DEPARTMENT

OF THE

NATIONAL PHnNDEHAPH EH3.
EDISON MANUFAETUHINE CO.
HATES MANUFACTURING CD.

10 Fifth Avenue.

otoscopes NEWYORK.N.Y.

BRUSSELS, SYDNEY,

2>L oot. S3, :

President, national Phonograph Co.,
Orange, B. J.,

/RSCK-/-6,

f 0CT2iW0«

y FRANK L, OYEfi.

Bear Sir

/'■In aoeordanoe with your request, we have thia day oahled
Mr. Graf, London,, as follows : -

- "GRAP TRY TO ASffiRTAlB PROM COLUMBIA PHOBOGRAPH
COMPABY LOBDOB OR 'BERLIfi ADDRESS PAUL CROUELIH . • PAY

TO HIM $600,00 OUR SHARE TO PAY EXPEBSES COPYRIGHT
COBPEBEHCE.,n

B/JTB.

Yours very truly,

Man8g^r^M^^^^artoenl?L

Cidmimbia PiroBToeiL\iBii CaME&fibr

Hotel 7«dlon« Berlin Nov. 2/OQ

Mr. M. Dorian, Asst. Coni. Mgr., .

London England.

Boar Ur. Dorianj

You probably have wondered why I httvo not kept
you posted as to the progress of our f isjh t on tho proposals made by
the Gorradn Government relative to a change in tho copyright la# a ao
Asaopocts aechnnicul reproducers', and, particularly S3 you have con¬
tributed ao rauch by your splendid analysis of tho whole situation.

The fact is that since I have entered into tho fight at this end
a have boon ao busily engaged day and night, that thero has not been
much tine for letter writing but now that tho International Confor-
xncc is, drawing to a clo30» I went to givo you a ntmtsary of what has
:Aaken pld.co here, and advise you as to the probable compromise which
will repu:lt.

It beicsme evident iraaodiately after my arrival, and. first intor-
d iew with our iimbasuador, that pa an American, i could do but little.
Aaerica is not a party to tho Berne Convention, and its represontaiiee
to bo; merely a looker on, and take no active part in tho proeeed-
-Ujjjgs. After paying a visit to Mr. Solborg, which he returned, nt
«H?’i.clt time, we took lunch together, I decided that it would be better
A'wv. every ..«wy..no t .to^b^vooven the appearance of embhrraatsing him
m th ray pro's cried, and .11 have not seen him since. ;VTHe Conference- -•
abei’tf''W diplomatic one, the public wa8 excluded, and, such
jnowa as'fel. fvaYO' bcen able to gather from -day’ to. day has either
xomo frora unofficial oources, or if from. any of the
.delegates themsolves, I had to gather it froa (
TTinferonco from what they would say rather than
gto bo able to say that 1 had been told ao and so.

I got ‘quickly in touch with certain of the German. manufacturers.

+ • r^SJe + ' i1 foun? a greatly-divided industry, and ! was really
astonished to learn^how very little they knew, of the whole mattorf
and the generai se.ntinient, that it was hardly any use to make a

to thnnih- GZZHP£ttt&l,*?£n§ miie the P^rosal, it', would, as of course
g through, . and nothing that v/e could do would prevent it. A mo-

«rnMC°U?3® °f Preparation, and I found that this admitted
f tho Co»P?«".to exact a. tax, and that Moinhardt the
io Id t^°futurPrraring *1 wa? ^irraly of the opinion that not only
It v,atbthe provision for universal royalty

hut that nftniHi be ^otermmed by the courts incase of dispute),
but that after the Convention was signed, wo would not have the

records of pSdces composed in the past, but in which
copyright still subsisted. To my astonishment and disgust, I found
fn« qUj te . general , that, while we wore not to be disturbed

nr,r, + naC°^+ made in xbo Pasb’ f 0 r all future manufacture after a
certain date, we must recognize the rights of the copyright propric-
*°p' W?U’ we had a meeting of the Association of Talking Machine
manufacturers, and I had a chance to talk to them for over an Hour,
'Jholo11sltVation> how and why we must insist on com-
liw-tew u!lty f°r ai1 pie??s Published prior to any change in the
’ J°“ the proposals of the German Government if the,y went through

ents SoulT'ir/fon^n111 ?n a oomplote monopoly and our oupoS-

• i , bd Let ^°r all practical purposes, everything they were soek-
wnul,rfhnn'i.anytSUCh ?°beraoiLthat covered the past as well as' the future
favJlri0 P?SSlb1?’ throu^h c°H^ion between publisher and a
hoI bfthD t0 ?1lli1|yJthe sl,PP°sed universal right, and

p®* by tho the courts had determined the raa-ttor, the one so

favored would have all of the business that was worth having f^m
folec^°I} in dispute; how and why we must do every-
in* f P°u to.Soi through the passage of some reoolution cov'er-

tn^vnifn for V"?y?rsal royalty which would bo' practicable, try
ihnt^nn t,ie p?x?lb4lty of double royalties, and when it appeared
1 °SrJ|],pt0S: ition to any change in the law was to be ineffective,
n+ ^ br sh?uld lnslst on protection to the phonogram from
r!1”5' Aks a resui t they agreed to appoint a . Committee to
„ h ®0I»- ?nd.next day telegraphed and telephoned to others in
I! j Leipzig inviting them to a second meeting; At this moot-
p?ad l°"T History and Analysis of the whole Movement, tho
n?rfn5aV3^S-be!n translated to the German in the meanwhile. I have
iL V\a° you through my letter, to Frank of the resuit. When

tho whole scheme was understood, they were with me to a man.

me^orinlGr^<??t0n%Co:, had, in course 6f preparation, an important
p It '/h ”na 6 'T from ray viewPoint, also admitted tho

• mam,fo„tnd Provided for an elaborate scheme, for protecting' the
ulca forUanrS V J9fa?*8 r®c°rds made in the Past> and-1 contained a'

S r i , Snd?d ^im0 durini Which they weP0 ba Permitted to
i • d 3n the Past* Fortunately I was abje to persuade

„thsir manager, to cut out much that was damaging ( totally
?»«n»fPy admissf°ns against interest ), and to add several things

absolutelv bwing tbat a11 the Pest of 1,3 would stand °

“*?}?;' sly fgainst any change in the law, hut fall hack to the
pos.tion taken by the Gramophone Co., when necessary. .1 was' also
ab j ® i tor c v iso the English translation hoforo it went to' lhe\ printer
a fnoi 1°"? and at>rengthen it, adding, (with Cohn's permission) quite
nal German1 t0 the LnEllsh version that does not appear tin the origi

.y° ,tban prepared on behalf of the other manufacturers.! except
Ivationai Co., whose representative was then acting on special in¬
ductions that the matter, was being handled from headquarters)

; °££Svmng completely round from the original position and opposed
5 iaSuMlK th% groung principlily, the IT, WOUND iRUIN

It is not necessary to say whore wo got them, but wo succeeded at
the last moment in gotting exact copies of two of the monopolistic
contracts made betwocn publishers and Fonotipia, and wo nublishod
them as a -part of our memorial. A delegation was sent to interview
the German delegates, and to porsonally present the same on behalf
of the industry. The Gramophone Memorial, was supplemented with
a third contract between publisher and Fonotipia. They were working
hard through the British Delegation, and their Memorial was sent tc
all the Delegates in German and English. The Homorial which

was also signed by Gramophone, was printod in German and French anc
a copy intrench 3ent with the German, to every Delegate. Meanwhile
the question had not been reached by the Conference, and your
Analysis was being whipped into shape in French, and printed in
French. and Gebman. i7e got it all finished and had the satisfaction
of delivering a copy .in French, German and English together with
a strong letter commanding it to the attention a nd stu^yof the
delegates, on the da^ beforo the matter came up for discussion.

The lotter accompanying same was also sent in Frenclj, German and
English. Meanwhile > we wore seeing such delegates as could bo
reached, including 't'ho Swiss Embassador, to whom we made a strong
appeal, and I koji.js in close touch with Sir Henry Borgne, and his
colleagues of thp British Delegation. By tho way, I had great
difficulty in pe-rsuading Sir Henry that the mere granting of the
right to use suph matrices as we now had, and prohibition in tho
future would not bo substantial justice. That was his position for
several days,, and it was hard to budgo him from it. !!r. Asquith
however, was more inclined to my view, and of course, I insisted
on complete indemnity,' and freedom for all pieces published in the
past. In course of time, it became evident, that the work we had
done and wore doing was bearing fruit. The Italian and French dele¬
gates were making a big fight to not only cover the past, but tho
future also, and without any mention of universal royalty.

We had sent a ’delegation to Leipzig, to work up interest on the
part of all manufacturers of mechanical musical instruments, and
they appointed a Cpinm i 1 1 e e to co-operate with us. I went to Leipzig
with five others ..pn'cluding Director Wilm of ffiationali Phonograph Co.
who had in the meantime received instructions to work with -us.

As a result of our Leipzig meeting, a strong telegram was sent to
the Secretary o£-?the Interior, tho President of the Conference, and
to each German,”' ^legate, pleading for further consideration of the
subject, and a chance to bo heard ££fi£E££. This was signed by
thirty-six firm's tho largest makers of mechanical instruments in
Germany, headed by Hupfeld of tho Phonola Company. We also sent oui
from Leipzig, /.an urgent lotter to about one hundred firms, explain¬
ing the situation briefly, and urging them to sent telegrams at
once to the S/ecretary of tho Interior and to the President of the
Conference, /Atating that the proposed change would injure them, anc
asking for ..further consideration of the matter. These letters were
sent to varidus manufacturers, who deliver raw material to the mak¬
ers of musical instruments, including firms in tho metal i wood¬
working, clock-work, hobn, chemical, etc. industries. Next day wo
returned to.' Berlin, ' and tjhe telegrams began to pour in. 'Fif ty-threi
came in one day, thirty- tj?o the noSt. From the conference itself
we heard tfpof f icially 'iha$ a groat fight was on, and that ! it looker
as if it would be impossible to reach an agreement. Practically
all agreed |that the phonogram was entitlod to protection. Oh;, by
the way, tips Intornatio|nal Co., put in a strong memorial devoted
primarily to> this pointj and it was being supported as much as wo
could by oiir'. personal !, interviews, though of course we could not asjp
-for this protection and', dony the Composer's right at the same time.

Frora/tfenYy Bcrgno,, I gathered finally that a scheme which to all
intents and purposes would give us practically the right to con¬
tinue to use all music published in the past was being considered.
While I agreed to the proposal if nothing hotter could be done, I
urged him to stand for the absolute right to use ovorythmg pub¬
lished in the past. Tho proposal appears lateri and from rumour
is the action to be takon by the conforonce. As to the future, his
position was that ho would not be willing to commit his government
to tho scheme for univorsal royalty, that it was a new and practi¬
cally untried principle, opposed to the universal right which a
person has; to dispose of his property as ho sees fit. .lei inal.ly
asked me what I would think of a scheme by which each nation was
to be left to decide whether it would make this a feature of the
law or not. I argued against such a course, pleaded lor similar
action in each country, but ho finally suggested that tho difficult
was that they never could come to an no- foment, po.ui.tu Go r-

many was insisting on the scheme, other nations some tor, some
against. Please do not understand mo to say that he told mo this
directly. You know thero is a way by which one can spend a lot ol
time in saying nothing, and still give a vout amount of mformatio.
and what I am disclosing to you must bo used guardedly, so that no
injury nay result even indiroctly to anyone. You must also know th,

I fool very grateful to the members of the British Delegation for
their splendid treatment of me. , ,

From 3uch knowledge as I gained with them, I saw that ,/e muot
stiffen up the backbones of the Germans, so as to got thorn to stan
firm, and for this purpose we had interviews with influential _
members of the German Delegation indluding the President of the Go
fcrence, Ilia Excellency, Dr. von Studt. Last Saturday afternoon
we had another meeting of the industry, and after reporting every¬
thing that had boon.' done, it was decided, -that we had gone our 1 in
it and could only await the result. To-day, there is a well define
rumour that they' have decided on their course, and whathas reache
me is so concrete that I pass it along to you. In my opinion this
is what will be done. If I- am not right, will correct it as soon
as I get exact information. , . , „

(1) Everything that has been used in the past on any kind oi
a mechanical instrument is to remain free forever.

(2) Anything, which up to the present has never been used on

any kind of mechanical instrument, and all new compos l tiot
published; af tor the Convention is formally confirmed by tl
respective governments, is not to be use.d, without consen
of the copyright proprietor. . ,

(2) The question as to whether a compulsory license is to bo
embodied into such laws as are passed in conformity with
the action of the Conference, is to bo left for each
Government through its legislature to decide.

(4.) The product of the matrix is to be protected from unlaw¬
ful multiplication. ,

I am informed that Germany will never pass a law that does not
embody the compulsory license scheme; from good authority I loarr
that France will do likewise. I fool pretty sure about. the. U.S.
with the./filian and Fonotjipia contracts before onr .legislators, £
that wi th the right to \ije everything used in the past, _pr° toctic
for our product 9 opportun

for compulsory 1 i cense., come p/up in tho legu

out of the Conference' - -----

and our opponents will be robbed of thj
effort to gety- control of or lay oun/induc
1 r Veuy sine'-

ity still for fightinj

qri^ts of their years of
e s iinjjpu ^tyibu t e ,
jiYirs /

Berlin, October 1908.

Sir,

Respectfully referring to the special petition already sub¬
mitted by the undersigned firms to the delegates to the Inter¬
national Copyright Conference, we have the honour to hand you
another elaboration in three languages, which is to contribute
to a greater elucidation of the standpoint set forth in the said
speoial petition, rendering same more oomplete and conclusive.

The enolosed memorial presents a detailed explanation of the
oopyright situation as related to the meohanioal reproducers
and its voices the opinion of the industry throughout the world.

For this reason and in view of the carefully and lucidly com¬
piled statistical material and the incontrovertible statements
contained therein the undersigned respeotfully submit and re-
oommend that this highly valuable work receive your favorable con¬
sideration and be subjected to a through and close study.

We trust that as a result you will not support a scheme to
take away rights which have been in existence for more than two
centuries and which have been solemnly reaffirmed by Article 3 of
the dosing protocol of the Berne Convention of 1886.

Very respeotfully yours
Anker Fhonogramm-Gesellschaf t m.b.H., Berlin
Beka-Record G.m.b.H.,. Berlin
Columbia Phonograph Co. m.b.H., Berlin
Dacapo-Reoord Co. m.b.H., Berlin
Deutsche Grammophon A.-G., Berlin
Ernst Hesse & Co., Berlin
Homophon- Company m.b.H. , Berlin
International Zonophone Company, Berlin
Kalliope-Musikwerke Actiengesellschaf t , Leipzig
Lyrophonwerke Adolf Lieban & Co., Berlin
Fhonographenwalzen-Fabrik „Elektra" Namslau
Folyphon-Musikwerke A.-G. , Wahren b. Leipzig
Schallplattenf abrik , favorite" G.m.b.H., Hannover
Schallplattenf ab'rik Globophon G.m.b.H., Hannover
Vereinigte Deutsche Spreohmaschinen-Industrie G.m.b.H..
Berlin

Vereinigte Sohallplattenwerke Janus-Minerva G.m.b.H.,
Hannover .

[ENCLOSURE]

BERLIN CONFERENCE,

FOR REVISION
of

INTERNATIONAL COPYRIGHT LAWS.

Instruments Serving to
Mechanically Reproduce Music.

HISTORY OF THE MOVEMENT
ANALYSIS OF PROPOSED LEGISLATION.

M. DORIAN,

Of the Columbia Phonograph Company, Gen'l.

[ENCLOSURE]

y^cTt^ji 1—

INTERNATIONAL
COPYRIGHT LAWS.

The Berne Convention.

International copyright laws are embodied in a convention,
familiarly known as the “Berne Convention" adopted at
Berne, Switzerland, in September, 1886, by the International
Copyright Union, composed of delegates from a number of
Governments there assembled.

It was arranged that these conferences should be held
once in every ten years. The second convened in Paris in
1896, and it was then agreed that the third should be held
in Berlin in 1906, but this date was afterwards changed by
diplomatic agreement to 1908.

The German Government has issued invitations to the
other Governments and the third conference will convene on
the 14th of October, 1908.

What Is Proposed at Berlin.

A number of amendments to the Articles of the Berne
Convention are proposed, which ' will modify or change
completely some of the laws governing International
Copyright.

The proposed amendment with respect to mechanical
reproduction of music is as follows : —

‘‘ XIII. Closing Protocol, 3.3. To authors of works of the tonal
" countries of ^th'e Conycntlon^in which, on the bams* of this

" mcchmJal reproduction of musical pieces, and^bTto permit
■„ ‘1‘ePl,hllc performance of their works by means of such instru-

the privilege, against a reasonable compensation, ol transporting
(transferring) and publicly performing the work in the manner '
as provided by the above paragraph, swb (a) and (b). It will
be left to the inner legislation of each country of the Convention
to determine in what manner the amount of said compensation
in the case of a dispute should be fixed."

[ENCLOSURE]

How The Law Now Stands.

By Article 3 of the closing protocol of the Berne Con¬
vention it was declared

This was merely formal recognition of the law as it
existed or had been interpreted for many years previously
in the different countries. France, for example, had as
early as May 16th, 1866— twenty years before the Berne
Convention— enacted a law specifically declaring such
instruments exempt from the copyright laws of the country,
and its courts had upheld this statute in a number of
instances. Other countries, including Switzerland, had
similar laws in force. Others, including Great Britain and
the United States, had so interpreted existing laws as to-
give them the same force and effect.

Since the Berne Convention of 1886 other countries have-
added to their statute law enactments which in spirit are
identical with Article 3 of the Berrie Convention. These.-
countries are :

No change was made or attempted at the Paris Conference-
Notwithstanding there have been two conferences (Berne
and Paris) within the past twenty-two years the law has-
remained just as it was.

The fact is significant and important as will be shown
further on. It will also be shown what are the motives
underlying the present movement for a change.

What Has Inspired the Proposal.

To properly interpret the proposal we must know what has
transpired since the Berne Convention of 1886, and the
Paris ( Conference of 1896, and consider the attitude of
authors,' composers and publishers of music, and particularly
the' latter, during the same interval.

Since 1793 there has been a copyright law in France. It
was enacted in the first year of the First Republic and has
been in force ever since. For practically the same period
there has existed in France an association of authors and
. composers known as " The Authors’ Rights Society " formed
for the purpose of protecting the rights of authors, and
clothed by the law of the land with ample powers to enable
them to effect that purpose. The Society has been most
diligent and active during the whole period -of lits existence... ;

It is charged, among other things, with the' duty of;
collecting from all theatres, concert-balls, and other amuse¬
ment houses, the royalties or taxes due to authors and
composers. In enforcing these claims it has had the Support
of the officers of law even to the extent of closing places of
amusement whose proprietors resisted the claims of the.'
Society. Wherever copyrighted music has been publicly1
produced the tax has been demanded and payment enforced.
The Society has gone so far as to insist upon this payment
in the case of cafes and restaurants where an orchestra lias
been employed for the entertainment of the guests of the
establishment, basing the tax, where no admission fee was
charged, upon the amount paid the ; performers composing
the orchestra, on the assumption that the employment of an
orchestra by the proprietor represented to the latter a
minimum value equivalent to the amount paid the per-;
formers. The law upheld the claim. The above instances
are cited to show how thoroughly and conscientiously the
Society has administered its trust. ■

In the year 1897 an American Company, the Columbia
Phonograph Company General, opened an establishment in
Paris, France, for the display and sale of their talking
• machines. One portion of their display consisted of a
number of machines which automatically reproduced a
selection of music recorded on a talking machine record
whenever a coin of a fixed denomination was deposited in
the coin chute or “ slot ” of the machine.

This display was a decided novelty in Paris and large
numbets of visitors entered the establishment to listen to
the machines.

There was no charge for admission but the agents of the.
Authors’ Rights Society declared that the operation of the
machines was a public performance of copyright music,
and promptly claimed and exacted the payment of a tax of
temper cent. (10%) of the total takings of these automatic

No attempt was ever made by the Society to prohibit the
recording of these selections of music on the talking machine
records, nor did they at any time question the right to make

The reason was plain. By the statute known as the Act
of May 16th, 1866, previously referred to, France had
declared the manufacture and sale of instruments serving to;
mechanically reproduce airs of music as hot constituting
musical infringement.

It is clear from the above recital that . the French laws
relating to copyright are exceptionally liberal, and that the
powers conferred upon the Authors’ Rights Society, in
France' are more than ordinarily large and comprehensive.
The control of public performances which it exercises is-
unique. No other country, with the possible exception of '
Italy, grants such powers. For these reasons it will be un-'

[ENCLOSURE]

necessary in the succeeding pages to refer again to this feature
of public performance inasmuch as it has no material bearing
upon the issues involved.

The success attending the display of automatic machines
by the Columbia Phonograph ' Company General, inspired
others to open similar establishments in Paris. Among
them was one I,ueien Vives who opened an exhibition of the
kind, to which he gave the name of “ I, a Fauvette,” and to
which admission was free. Promptly the Agents of the
Authors’ Rights Society appeared and exacted payment of
the tax, as had been done in the case of the Columbia
Phonograph Company General; Vives found -the tax a
burden and he made numerous unsuccessful efforts to evade
it. He studied carefully the laws under which the Society
operated and in the course of his researches he necessarily
had recourse to legal aid. He conceived, or had suggested
to him, the possibility of an immense speculation. If the
control of copyright music in its relation to talking machine
records could be secured, the revenue from the royalties
squeezed from the manufacturers of these records would be

The fact that a statute existed which expressly exempted
.these records and other mechanical devices from the penalties
of copyright infringement, and that this statute had been
upheld by the courts, did not deter him, -because he evidently
regarded the matter as a speculation, and decided to take
the risk.

He approached the different music publishers (not the
authors or composers be it noted) with a proposal to under¬
take at liis own expense a test case and to carry it through
the courts if the publishers would assign him a part of their
rights for a period of years and authorize him to use their
names as plaintiffs in the action.

He presented the matter in such glowing colours that a
number of the publishers entered into contract with 'him
by which they ceded their hypothetical rights as to talking
machine records on condition that he would bring the test
action, and, in case of success, pay them a guaranteed sum
on each record licensed by him thereafter during the period
of the contract.

' No contract was made by Vives with the Authors’ Rights
Society nor did this Society appear anywhere in the sub¬
sequent litigation. No author or composer figured in the
matter. The speculation was confined to Vives and the
publishers.

Beginning of the Agitation. .

Vives began an action in the names of the publishers.
The case came on to be heard and Vives was incontinently
beaten. The Court dismissed the action. Vives appealed.

By this time the newspapers and the public had begun to
, discuss the matter and to calculate the profits which would
■ have accrued to Vives and the publishers had Vives suc¬
ceeded in his attempt.

The cupidity of the publishers was aroused and instead of
leaving Vives to bear the burden alone they actively support¬
ed him with funds and the force of their social and political
influence. . Long before the appeal was argued the rumour
spread about Paris that the publishers were working like
beavers to ensure favourable action by the Court of Appeals.
Vives himself openly declared, long, in advance of the
hearing, that he would win in the Court of Appeals.

The decree was in his favour as to records which contained
the words of songs, but adverse to him as to such as contained
music without words. For example, .if. the "Soldiers’
Chorus” from Faust be reproduced without the words the
Court held this would not constitute infringement, but if the
words also were reproduced infringement was established.

The decree of the Court of Appeals was rendered the first
day of February, 1905.

Effect of the Decree.

As soon as the decree was announced Vives set in motion
plans for reaping the harvest. His throw of the dice had
been successful' and he set about collecting the stakes. From
one large concern he received no less a sum than £20,000
paid him as indemnity for the past in order to secure from
him permission to continue business. From other manu¬
facturers he received smaller sums for the past, and from all
of them large sums for current supplies' of the labels which
he compelled them to affix to the records as evidence of
payment of the tax he levied.

, Carries The War Abroad. ..

Vives sent his emissaries to other countries to bring about
deals with foreign publishers similar to those made with the
French. The English publishers refused to treat with him,
as they rightly concluded they could do for themselves all
that Vives Could do for them. In some other countries,
however, he was more successful in arranging with publishers,
and very soon after his victory in France suits of a similar
character were instituted in Belgium and. Italy.

Ill'Belgium the law was similar to the French and exempted
mechanical reproducers of music. The ..Belgian Courts
rejected the claims of Vives and the publishers, the final
Court of Appeals dismissing the case and holding that
mechanical reproductions of music were not ah infringement
of musical copyright. •

• In Italy the final Court of Appeals has hot yet passed iipon
the matter. The lower courts in Italy have .upheld -'the
claims of the publishers, - notwithstanding that 'Article 3 of
the Berne Convention was adopted by that country as part
of its law of copyright. To justify its repudiation of this
. Article'tlie Italian Court (lower) held that the articles of the
Berne Convention were ratified by the King and that this
was .irregular and therefore, not binding upon;. the Court'.

[ENCLOSURE]

It remains to be seen whether the Italian Court of Cassation
(the final court o£ appeals) will confirm this repudiation
of. a solemn convention.

Appearance ol Competitors to Vlves.

These efforts in England, Belgium and Italy consumed
time and in the interval Vives and his methods were being
imitated. Competitors sprung up and some of them came
from the ranks of the talking machine manufacturers.

As soon as the French decree of February 1st, 1905, was
announced, the International Talking Machine Company,
of Berlin, Germany, began making contracts with music
publishers in Germany, Austria, Hungary, Spain, Italy,
Holland, and other countries on exactly the same lines as
the Vives contracts, but with this important difference that
instead of granting it power of licensing others to manu¬
facture sound records from the music of these publishers,
the International Talking Machine Company was granted a
monopoly of the right of manufacture of these publications
as to talking machine records in the event of a favourable
decision in the cases which the International undertook to
prosecute at its own expense. It is estimated . that the
contracts made in this manner by the International embrace
eighty per cent. (80%) of the music publishers of Germany
and of Austro-Hungary.

The controlling iuterest in the; International Talking
Machine Company is owned by Fonotipia, Limited, a British
limited liability company. ' Fonotipia, Limited, has its
own organization in Italy known as Fonotipia (Italy).- The
Managing Directors of the International Talking Machine
Company, of Fonotipia, Limited, and of Fonotipia (Italy)
are identical. -

In Italy, Fonotipia (Italy) made contracts with the
principal Italian publishers including Ricordi and Sonsognio
whereby Fonotipia was given a monopoly of their publi¬
cations for talking machine purposes in the event of successful
termination of the cases before the Italian Courts.

Ricordi was given a block of shares in Fonotipia and
made a director.

When the lower court in Italy announced its decision in
favour of the publishers Fonotipia came to the front, as the
cessionaire of the rights of the publishers, with demands for
the payment of indemnities for past infringement, and is
to-day. receiving from. the manufacturers payment of a tax
on every record sold of selections taken from the works
published by the coterie of publishers controlled by Ricordi
and .Sonsognio from what is known as the " second period.”
As to selections from the “ first period ” Fonotipia hold a
monopoly, and no other manufacturer can use first period
selections without permission from Fonotipia.

By “first period”' arc understood musical works which
are less than forty, years old. By the “second period?’
those which are more than forty years old.

International Talking Machine Company In other Countries.

In Austria, Hungary and Germany suits exactly similar
to the French, Belgian and Italian were instituted, nominally
in the names of. publishers, but actually at the instance and
-cost of the International, the real beneficiary in the event of

Authors and Composers Conspicuous by Their Absence.

. As in France so in Italy, German};, Austria and Hungary
>are the authors and composers organised and represented by
Authors’ Rights Societies, but in none of these countries have
the Authors’ Rights Societies or individual authors' ox
■composers appeared as parties to any of the suits which have
been carried through the courts. In .every instance it is
•nominally the publisher but in reality , the speculator. In
not a single instance is the litigation due to a bona /We effort
-on the part of author or composer to prevent improper use
•of copyright music. In every instance the motive is-the
•same— a purely speculative attempt to secure and maintain a
monopoly.

Result of the Litigation.

In Austria the final Court of Appeals has declared that
: instruments which serve to mechanically reproduce musical
works do not infringe musical copyright. -

In Germany the lower courts have heard and dismissed
three separate and distinct suits for the same reason, viz.
that mechanical reproductions do not infringe.. No final
Court of Appeals in Germany has passed upon the question,
but it is not considered possible, in view of the German law,
for such court to reverse the judgments of the lower courts
on this question.

. In Hungary the lowest court held there was infringement.
An appeal was rioted and the case was remanded for" new
trial. The judgment was again in. favour of the publishers
and a further appeal was noted arid is yet to be heard. It
is expected the lower court will be reversed.'

Ill France the Court of Cassation (the final court of appeals)
by judgment rendered -July .21st, 1908, .affirmed the decree
•of February 1st, 1905.

In one European country only (France) has a final court
•of Appeals rendered a judgment in favour of the claims of the
publishers and speculators. In this one case, however,
the recognition is partial only because the court has declared
that where the words of a work are not reproduced infririge-
ment does not result.

V In Belgium the final Court of Appeals has Held there was
no infringement ; that. instruments serving to mechanically
Reproduce airs of music are free from copyright restrictions,
i In England and. America the epurts have, taken the same

Efforts of the Speculators In England and America.

In England the courts have again and again decided that a.
perforated sheet or roll for an /Eolian organ is not an in¬
fringement of copyright. In the case of talking machine
records also the English courts have held there was no¬
infringement. The leading English case in this connection
is the oft cited one of Boosey v. Whight (1900) 1 Ch. 122.

The latest case before the English courts was a prosecution
at Bow Street, in June of 1908 against James Connor, a
hawker, who was summoned for having offered an alleged
“ pirated copy ” of a musical work, to wit, a perforated music
roll, being a reproduction of the pianoforte accompaniment
of a song. The court (Sir Albert de Rutzen) decided that
there was no evidence to lead him to suppose that the-
Legislature intended the words “ written or printed copy of a.
musical work ” to apply to a perforated roll for use with an
-'Eolian organ, and dismissed the case. A second summons-
against the same defendant for offering in like manner a
talking machine disc record was before the court at the same
time, but was not proceeded with.

Frequent amendments to the copyright law of England
have been made. The latest is. known as the Musical
Copyright Act, 1906. Paragraph 3 of this Act defines
“ pirated copies ” and expressly provides that the expression
" pirated copies ” and ", plates ” shall not, for the purposes-
of the Act, be deemed to include perforated music rolls used
• for playing mechanical instruments or records' used for the
reproduction of sound waves, or the matrices or other
appliances by which such rolls or records respectively are

■ In the English cases cited above it was a publisher who
prosecuted. That the speculator has been busy in England,
however, is a fact. The then exclusive agent in Great
Britain of the International Talking Machine Company,
previously referred to, made the statement in the presence
of two witnesses that he had signed contracts with fully
eighty per cent. (80%) of the music publishers of Great
Britain whereby his firm was granted and guaranteed the
>' exclusive right of publishing in the form of talking machine
records ' the musical works owned and controlled bv the
publishers aforesaid, in the event that a law should be enacted
in Great Britain bringing such records within the purview;
of the copyright law.

In the United' States the speculative character of the-
efforts made’ there have been most clearly shown. The-
Sujjrenie Court of the United States recently handed down a.
decision in a case involving the use of perforated music rolls:
It was the case of White-Smith Publishing Company v.
Apollo Company. The real plaintiff , was not. the White-
Smith Publishing Company but a manufacturing’ concern-
engaged in the manufacture of piiih'o players and perforated
music rolls for use with the same. Its purpose was to secure-

a decision by a competent court which would hold that- per-,'
forated music rolls constituted an- infringement. It had.
previously secured contracts (fifty-two in all) with each’
member of the Music Publishers’ Association, a close associa¬
tion of houses engaged in the publication of music, and similar
contracts with other publishers not in the Association-
making eighty contracts in alt with the leading music
publishers of the United States.

By the terms of these contracts this manufacturing concern
was granted an absolute monopoly of the business oj cutting
perforated music rolls. • ’ ,

The name of this manufacturing concern is the /Eolian
Company— the largest piano player manufacturers in the
world. The /Eolian Company by its contracts undertook to
carry a case through the courts at its own expense. All of
these above stated facts were before the Court and were
never contradicted or controverted. The Case of White-
Smith Publishing Company v. Apollo Company was
carried through to the Supreme Court. That court held that
perforated rolls were part of a machine which, when duly
applied and properly operated in connection with the
mechanism to which they are adapted, produce musical
tones in harmonious combination but cannot be. considered
copies within the meaning of the copyright law.’

The following shows at a glance the status of the litigation.

For the Publishers. Against Them.

France. Belgium.

Austria. , .

Germany-
Great Britain.

United States:

Undecided. . ,

Hungary.

- Italy. : '

’ Copyright in United States Congress.

The coterie of would-be monopolists, embracing the.
AEolian Company and the publishers! were not willing tq
risk everything in the courts and they cast an anchor to
windward in the shape of a Copyright , Bill which was intro¬
duced simultaneously in both Houses of the' United States
Congress on the 31st day of May, 1906; Following the
Usual practice these bills were referred to a Joint Committee
of the Senate and House of Representatives which proceeded
.to . hear interested parties on the subject of the proposed
new legislation. It ' 'was' established beyond doubt at these
hearings that those .sections of the bill affecting: perforated
music'rolls.and talking machine records were framed. for the
purpose of completing a plan whereby the /Eolian Company

-was to secure a complete monopoly of the sale of piano playing
instruments and rolls.

A plan for a similar monopoly with respect to talking
machine records was on foot.

Photographic copies of the contracts between the AJolian
Company and the publishers were filed with the Joint
■Committee and admitted in the record of the proceedings
(See pages 2159, 301, 302, 303, 304, 342, 343, 349, 350, 383,
384 Official Report of the Arguments before the Committees ,
on Patents on the Bills S. 6330 and H. R. 19853 to Amend
and Consolidate the Acts respecting Copyright— December
7, 8, 10 and n, 1906. Published at Government Printing
Office, Washington, D.C., 1906).

The hearing of the Joint Committee continued at intervals
■until the end of March, 1908. The original bills were
abandoned and substitutes prepared which are still under
consideration. These substitute bills, if either of them
Become law, will make it impossible for the AJolian Company
or any other concern or group of interests to create or main¬
tain a monopoly.

Efforts in other Directions.

Failing to secure from the courts the aid they speculated
■upon (for with the exception of the half-loaf given them in
France they have secured no final decree in any country)
the speculators have turned all their guns upon the Berlin
Conference in the hope and expectation of stampeding it
and securing by International Compact what has been denied
.them under the already liberal laws of the respective countries.

Since Vives’ successful raid upon a legitimate and pros¬
perous industry the cupidity of the publishers and their
speculative allies has known no diminution. The immensity
of the scheme has inspired one of the greatest forays in
•commercial history. To lay an industry which is becoming
world wide under perpetual tribute, or, better still, to bind it
fast within the tentacles of a monopoly is the aim of these

They have prepared the way, as they believe, for an easy
victory at Berlin.

They have tried moulding public opinion in a number of
ways. By inspired articles in the Press ; by loud pro¬
testations that the author and the composer was being
robbed by " brigands ” and “ thieves," and 'that sacred
rights were being violated.

They have convened conferences and conventions and
have passed resolutions all intended to influence the action
of the Berlin Conference.

All this in the name of the author and composer, but' the
real author and the real composer is like the good little boy
who is neither seen nor heard. In all this agitation, which •
started in 1905 when Vives secured his first decision, only an
occasional author or composer appears.

It is always the publisher and back of him the speculator.
In their conferences and their conventions there is never a
word about contracts with International Talking Machine
Company, AJolian Company, or others. The silence as to
this feature is so profound and so dense that it would require
a sharp edged tool to make a dent in it.

' The Neuehatel and Madrid Conferences.

The conference of the International Literary and Artistic
Association was held at Neuehatel, Switzerland, August
26th-29th, i907. From the extract of the report of the
official proceedings the following are quoted : —

" of music, talking and singing machines which thrust themselves
” everywhere before the tribunals, and it demonstrates^ the

" of original works^ ;* and ^complicated by the difficult interpreta-

" Berne in Belgium, in Great Britain, in Italy and also in the
" United States.

" and briefly analysed by the reporter, several recently obtained
" in Italy and in Hungary, or now awaited in Vienna."

and the International TnlkingPMnchino Company. P

re advanced hour, the Conference listened
ntionto a luminous address given by Mr.
the question of mechanical instruments of

standing and the offers of trifling character, which they made

posers," "tile views adopted by the Congress and the result of
the inquiry made by the bureau of editors representing the

tend toward the suppression of No. 3 of the protocol of closure.
Note No. 1. The .tenor Tnmagno received 713,000 frs.( and in
addition royalties for. singing. in the six Gramophone discs,

The address was a direct nppeal tothe cupidity and greed
of liis auditors made by a man who at the moment of making
it was a participant in a contract which aimed at creating
a monopoly in which no provision whatever was made for
the author and composer.

"Protection full -and entire of authors ■ and composers against
“ the reproduction of their works by means of musical instruments

The Mr. Enoch referred to is the French Music
Publisher of that name who was one of the first to enter into
the contract with Vives and who has ever since been the most
prominent of all the French publishers in the subsequent
developments in France.

Added to cupidity and greed is envy of the great. artistes
who by the supremacy of their art are able to earn large
honorariums, forgetting or ignoring that it was the artistes

[ENCLOSURE]

A Radical and Dangerous Proposal.

The proposed amendment is the most radical legislation
imaginable. It completely overthrows existing conditions
and established laws ; annuls Article 3 of the closing protocol
of the Berne Convention, and substitutes for it an absolutely
new and drastic principle never before recognised or. ad¬
mitted in any copyright statute of any country. It gives
to authors and composers and their legal successors rights
which have no foundation' in natural or statutory law, or „
any basis in equity, rights which no nation has ever hereto¬
fore conceded them.

It is dangerous legislation because it disturbs lawful
vested business interests of long standing, and is destructive
of industries in which enormous capital is invested and
large numbers of people are employed. It invades the
domain of patents and renders null and void letters patent
solemnly granted for new and useful inventions.

Meohanloal Reproducers.

As previously stated Article 3 of the Berne Convention
did nothing more than put into formal phraseology recog¬
nition of the law as it had existed for a long scries of years.

Mechanical appliances for the reproduction of musical
sounds. were not new at the date of the Berne Convention.

The following interesting historical- data is published by
Albert H. Walker, Esq., of the New York Bar, an eminent
American Lawyer and authority on Patent and Copyright
Law, in an illuminating and comprehensive brief, filed by
him in the Supreme Court of the United States in the cose
of the White-Smith Publishing Company v. The Apollo
Company. His brief was filed by special leave- of the Court
and constitutes a complete history of the subject of copy¬
right in England and America going back to as early as 1649.

Mechanical reproducers of music had been known as early
as 1731 when a British Patent was granted to Justinian
Morse for an automatic organ.

i.In 1762 the Earl of Bute had built for him an automatic
organ. It. had sixty cylinders, each of which was four
and a half feet long with projecting pins so placed as to
open and close valves in pipes and thus audibly perform . .
whatever music was followed in setting the pins on the
cylinders. In 1787 this organ was supplanted by another
built for the Earl of Bute by Mr. Cumming. Both are
described in a pamphlet published in London in 1812
entitled “ Cumming’s Machine Organ, a Sketch.”

In 1775 there was published in Paris a still extant book
of 236 pages entitled " La Tonotechnic, ou L’Art de noter
I-es Cylindres.” It was a text book, on the art of fixing
pins upon the peripheries of cylinders in such position
that when rotated the cylinders' would cause^the mechanism
of the instrument to perform whatever music was followed

in' locating the pins. This book proves that the art of
making automatic musical instruments was far advanced
in Pans in 1773.

Many small musical instruments or musical boxes were
constructed in Paris in accordance with the instructions
of the French book of 1775 and exported to different countries.

The Swiss .were specially adept in the manufacture of
these music boxes and for generations their manufacture
and export have been a national industry of the Swiss

Perforated sheets of paper for use with automatic musical
instruments are shown and described in British Patent
No. 11,886 of October 7th, 1847, granted to Alexander
Bain.

In 1842 a Frenchman named Seytre made a perforated
paper sheet, in the form of an endless belt, for operating
mechanical musical instruments and introduced such
instruments into France and probably also into several
other European countries. .

It is clear from the above enumerated instances that
instruments serving to reproduce mechanically the. airs of
music were not a new thing in 1866 when the French statute
was enacted, and still less so twenty years after when the
Berne Convention was held;

Alleged “ Natural ” Right.

Those who are promoting the present agitation took
the ground that the French statute of 1866 and the Article
3 of the Berne Convention did hot apply to talking machines
because these were unknown at the respective dates, and
that both the statute and the article must be so interpreted
as to exclude talking machines* from the exemption.

The Courts refused to give this interpretation, and the
publishers now fall back upon the argument that “ natural
right " justified an author or composer in monopolising every
possible use or expression of an idea.

Not a New Proposition.

This claim to a “ natural right ” is put forward as a
new and unanswerable argument. It is neither.

Natural right as a doctrine applicable to copyright was
raised in the case of Donaldson v. Beckett in the English
House of Lords in 1774. The best report of this case
; is contained in Vol. 17 of the Parliamentary History of
England, pages 953 to 1004 inclusive. Mr. Walker in his
brief above referred to gives a most circumstantial analysis
of this great case, which- is epitomised in the three following
paragraphs.

Lord Camden, , one time Chief Justice of the Court of
Common Pleas and Lord Chancellor of England, .'took the
floor as a peer and delivered an' elaborate, learned, and

■eloquent argument against the theory of the existence pf any
common law or natural copyright in England, at any time
in the history of that country, Among other things he

" Thoy forget their Creator as well as their fellow creatures,

" who wish to monopolise His noblest gilts and greatest benefits,”

Thirty-three lords considered the question. Eleven
voted to affirm the doctrine of a common law or natural
right, one did not vote, and twenty-one, or two thirds of
of the entire number, voted in the negative.

Immediately after the decision in the case of Donaldson •
v, Beckett the London booksellers induced the House of
Commons to pass a new bill for their relief. The' House
of Lords rejected this Bill June 21st, 1774.. No attempt
was ever again made in the English Parliament nor in any
English court to maintain any contention' that the common
law of England ever included any copyright. .

No Natural Property In Ideas.

The author is the absolute master of his idea or his work
only so long as it has nol left his brain.

Once it has materialised iii manuscript form, been given
-public representation or published, the public acquires
immediate rights in it. It falls into the public domain.

Everyone may engrave the work upon his memory, .
"recite it, and if it is.a musical work, sing it or play it upon
a musical instrument. .

To this construction of the law the courts have given
their approval. . . . . .

There exists no property in ideas — musical, literary or
■artistic— except as defined by statute.

The only right which exists is a statutory one.

In each country which has enacted laws for the purpose
of protecting intellectual conceptions the same two-fold
object is apparent, viz. : —

FIRST. To promote the growth of the liberal arts
and sciences by offering to authors, composers, and inventors
an , inducement to disclose their ideas, discoveries, and in?
.ventions, and

SECOND. To give to the public the ultimate property
•in those ideas, discoveries and, inventions.. ;

The second object has always been the paramount one,
because it ,is .the .'interest of the public, the people, which
legislatures, must .first consider, because they constitute
the greater number. v "

In, every country the laws governing copyright define
the rights .-protected. When there. is doubt as to the, scope
of the law and the courts are called upon to construe" the
meaning and • application of. the . statute they look to the.

. intent of the legislature and determine from that bow far the
law' shall he stretched to meet the requirements of the
particular case. '

A copyright is in the nature of a contract between the
author and the. public, whereby, in consideration of the •
benefits conferred upon the public by the publication ojf
the composition or work, certain exclusive privileges are
granted the author for a definite period. This exclusive
privilege covers the making and selling of the graphic
representation of the composition, or that which represents
the composition to the eye, or by which the idea is set forth
visually. In other words tbe state gives the monopoly
of the graphic .signs to the author, and the benefit of the
audible sounds to the public.

To encourage the author or composer to put bis idea into
communicable form, to the end that the public may be
entertained, instructed, educated and amused, the author
and his legal representatives are given, for a limited period,
the exclusive right of making and selling the graphic dr
visual form in which his idea' may be conveyed.' Anyone
wishing to use it in this form must pay him for the privilege
during the prescribed period of monopoly. .

The idea, however,' ceases to be .his the moment it is
published or disclosed. It falls at once into the common
fund of public knowledge and . becomes the' property of
the public. ,

At the end of 'the prescribed period the monoply of
. making an.d selling the graphic form of the idea also falls
into the. common or public domain and anyone may use,
it in this form- also.

So long, however, as the1 statutory , monopoly of printing
and selling the graphic form of the idea continues the
public may not use such graphic form without the author's
permission. , ;

It is a contractual right which the author enjoys. . The
law says to him that if he will communicate his idea so
that the public may benefit by it he may take in exchange
for it .the exclusive right of printing and selling the visual
expression of it for a prescribed period.

There is . no compulsion put upon the author. He is
free to accept or reject the terms offered him. He may
refuse, to , disclose his idea and' thus deprive the public
of all benefits in it. But if he once discloses the thought,
.the idea, or the work, and exercises the option afforded him
by the law his properly in the idea passes front him for ever.
and lodges at once and for all time in the public.

This inflicts no hardship upon the author. On the
contrary it confers upon him and his legal representatives
a very substantial and long continued benefit in that it
'permits' of the transformation' of an idea, which" immured
.in the brain pf the author is wholly, unproductive, into a
tangible, productive, . and remunerative ! asset . , The greater
.the popularity accorded the idea; after -its. publication the
more-remunerative it will prove to the author in the graphic
■form, of the' sale of which he Has" the monopoly.

The law protects him in the enjoyment of the monopoly
and opens to him the courts of the land where his rights
are inquired into, tests applied to determine if these have
Deen intnnged, and suitable compensation awarded him.

In the courts the test has universally been one at the
eye. Can the alleged copy be read by the eye ? If it cannot
it is not a graphic representation and does not infringe the
author s copyright. If it can be read it is an infringement,
and the courts apply the remedy.

The courts of many countries have been called upon to
inquire into this right of the author, to apply the test
and to award suitable compensation where the author’s
rights have been infringed.

ar® s°me of the latest decisions:- .
■Inul Tn¥ml °l l,le Seme, Court of Appeals of Paris ,
,th Chamber, in the case of Maquet and others against
rhibouville, decided, August 2nd, 1893, in a case involving
:he use of perforated cartons for use with mechanical musical
nstruments, as follows : — •

n.°tation. «>?, perforated cartons are
" hTcannot rccognS' “Se

” “ £cn*raI tuition of

“ i" that ' form for the musical public. * * * *
" Considering the perforated cartons as a movable 1
" b°ntl the lcSS an inteSral part of the organism an

" infringement but simply M^'mech^n^

The Court of Cassation Belgium (hirst Chamber),—
reyiously referred to, the final court of appeals of Belgium
-May 2nd, 1907, in the case of Massenet and Puccini
gainst the Compagme Generate des Phonographes, Cinemato-
raphes et Appareils de Precisioh— in disposing of an
ppeal from a lower court, held :— ,

" nnS’l'I.n'"!8 th,“‘ iudsf bcl°"’ established that the discs
“"„,Cy„?derS <s°und rC.COrd,) are “"'y tllc nW" o' ■>" instru-
1 7 Si»M tai! »£»{ ill ' ‘^Considering that these

" Considering that, in deducing /ton

III other words the Court of Cassation sustained the findings
of the Court below and dismissed the appeal of the editors.

In the celebrated English case of Boosey v. Whight (1900)
1 Ch. 122, it was held after due consideration that the per¬
forated music rolls employed in the piano player were not
infringements because they have nothing in common with
conventional signs permitting one to read and understand the
work which they reproduce and that isolated from the
. machine they are without utility. '

The English Parliament has recognised the justice of this
decision. As Into as 1906 in revising and amending its
copyright laws it expressly exempted from the operations of
the law talking machine records and the matrices and moulds
for producing the same.

In the United States there have been numerous decisions
in the same line where the courts have uniformly held that in
interpreting and construing the law the term "writings”
must govern and that as a talking machine sound record is
in no sense a “ writing ” inasmuch as it cannot be read and
one cannot understand from it, by an eye test, the work it
reproduces it cannot be considered an infringement. The
most recent American case is that of the White-Smith
Music Publishing Company v. Apollo Company, previously
referred to. When this case was before the United States
Circuit Court of Appeals the court said :—

" We are therefore of opinion that a perforated paper roll, aucl:
" as is manufactured by defendant, is not a copy of complainant':
" staff notation, for the following reasons : —

" It is not a copy in fact. It is not designed to be read or actually

is practic lly disproved
“by the great preponderance of evidence, even if true would
establish merely a theory or possibility of use, as distinguished
“ from an actual use. The argument ,that, because the . roll is
“a notation or record of music, it is therefore a copy, would

“ perforations in the rolls are not a varied form of symb'ois.sub-
“ stituted for the symbols used by the author. They are' men
“ adjuncts of a valve mechanism in a machine. In fact the machitu
“ or musical playing device is the thing which appropriates thi
“author’s property and publishes it by producing the musica:
’’sounds, thus conveying the author's conception to the public.'

-The Tribtittal of Commerce of Paris sitting at'Paris rendered

o United States Patent Office as the Grapho-

le public a removable sound record— one that
, taken of! one machine and put upon another,
te of this patent the improvement in the art of
ig has been stupendous and rapid. From a
g the industry has expanded until there is not
:ry on earth where talking machines are not
ippreciated. The capital invested in the
nto millions, while the people employed by the
anies constitute an army of many thousands,
is advanced new and useful inventions applied
ive multiplied and have formed the subject
rs patent in every country having a system of

granted for new and useful inventions for the
hat copyright is granted for a musical or
in, viz. : to promote the development of the
es. They ar.e, therefore, upon the same plane
o the same consideration, and to the same
lopyright.

:ourts of all countries have given them ample
have treated all patents alike, discriminating
3 one industry nor against any other,
embodying improvements in talking machines,
- the making of sound records for use with such
been before tile courts time after time, and,
provement was new and useful, have been
eld.

herefore, that the talking machine has legal
r its existence. It has been tried in the fire
cstigation and has emerged from the ordeal

:us is unquestioned and unassailable. It puts
lother claim to consideration which is equally
is llie musical instrument oj the -public without
ention of the last two hundred years has made
n upon the public. It has taken such a firm
affections of the public that any attempt to
iper its usefulness, or impair its attractiveness,
iry upon a vast number of people.

e Publio Regard the Talking Maohlne.

The reason for- this universal popularity is simple in the
extreme. The talking machine, alone of all mechanical
devices, reproduces not only the air of music but the quality
of voice, the artistic rendering of the performer, and brings
to the ear of the listener all the tonal beauties which a trained
and capable artiste can impart to even the simplest nielody.

• No one can fail to see where the interest of the public lies in
this matter. These mechanical devices have brought within
the reach of all classes, the rich, the middle class and even the
poor, the best the world can produce in music and song. The
benefit rendered lias been incalculable.

Prior to the advent of these devices good music in their
homes was a thing quite beyond the means of all but the rich
or well to do. Even to the fairly prosperous, grand opera,
rendered by great artistes, was a luxury rarely indulged. To
the poor, good music well rendered was a sealed book and a
thing apart from their lives.

Now, however, the devices for mechanically reproducing
music have revolutionised all this and in the palace,
the mansion and the cottage can be heard sound records
made by the world’s greatest artistes. The working man
who cannot afford a pianoforte, or the expense of having his
children taught the art of playing it, can and does afford a
machine and sound records for the same, wherewith to amuse
and instruct his family and to create and foster in them a
love of music. The educational value of such a medium
must perforce be considerable. These machines are in
constant use throughout the world, and wherever there is one
there is an owner whose rights arc jeopardized by the proposed
amendment.

The change has been brought about by inventive genius
which has contributed automatic sound producing devices
to the world.

No rights of the composer or publisher have been invaded
or adversely affected in the slightest. They remain exactly
as they were before, but have been rendered more valuable
by increasing enormously the demand for the printed copies
of the musical composition. This has been a direct result
of the popularising effect of the mechanical reproducers.

The more widely the idea is disseminated the greater the
demand for the printed copy.

This wonderful change has been brought about by the
operation of the patent taws. The instruments which have
been the medium through which the benefits o / these laws
have been conveyed to the public tire under the protection of
those laws, and to take away those benefits and to remove
that protection would be an act of gross injustice to the
public and the inventor alike.

The publishers who urge the perpetration of this injustice
have not contributed in the slightest degree to the change.
No just reason can be urged by them why they should be given
• even the least recognition in this respect, yet they have the
effrontery to demand a monopoly of an industry which has
been born, nurtured, and matured without their aid or
encouragement, an industry which is dearer to the heart of
the public than any other which is not occupied with the
production of the necessities of life, and which, for that very
reason, '.has excited the cupidity and greed of the publishers.

If the proposed amendment be adopted at Berlin the
monopoly becomes a possibility ; that possibility will be
quickly transformed into an actuality, and au immediate
check given to progress in the art of souud reproduction.
The industry, which has already added largely to the world’s
knowledge and happiness and which is capable of still
further enhancing both, will come to a standstill. The
elimination of the stimulating influence of healthy com¬
petition will Constitute a most effective brake upon further
effort to advancement or progress in this most useful and

The advance thus far made, considering the short time
which has elapsed since Bell and Tainter’s discovery, has
been remarkable. The reason is to.be found in the vigorously
healthy competition which 1ms existed among the different
manufacturers, all of whom have been compelled to un¬
ceasingly strive for quality and perfection in their productions
if they would secure and retain a compensating share in the
business. . With so many different forms of record pn the
market it has become increasingly necessary for each
manufacturer to keep his product up to the highest known
standard, and, if possible, to be a little in advance of his
competitors. - This has acted as a spur to the industry, and
resulted in a more rapid development of the art than would
otherwise have been the case.

Create the monopoly ; remove the competition, mid all
will be changed. The growth and development of the art
of sound recording and reproducing will be arrested midway
and it will make no further advancement. The 'public. will
be as great a loser as the manufacturers. . . 1

permission conditional upon the payment of a taxi This
lax must of necessity be added to the present cost of the sound
record so that eventually it is the public which pays the tax.

When it is considered that in Great Britain alone and in
the short period of twelve months nearly sixteen million
sound records were purchased by the British Public ; that in
all the principal countries of Europe, as'well as in America,
the purchases of records are on a correspondingly large
scale, a fairly accurate estimate may be arrived at of the
great stake for which the publishers are striving. If the
tax on each record be placed as low as a farthing each the
revenue will be colossal, so much so that the mind is staggered
by the immensity of the scheme.

When it is further considered that, all this wealth" is to
come from the pockets of the public and that the publishers
give absolutely nothing til return for it, the iniquity of the
proposal must force itself upon the consciousness of every
fair minded person.

To pass legislation of the character demanded would be to
place the benefits which mechanical musical devices have
brought within reach of the public in the absolute control of a
publishers' trust already formed, well organised, and greedy
to the point of avarice.

An Absurd Proposition. <

In effect the publishers say to the public: — Notwith¬
standing that for more than two hundred years you have
enjoyed n certain privilege which the law has reserved to you,
and notwithstanding this privilege is; dear to you, it is
robbery on your part to exercise it. Give it to us and we
will take good care of it. If you want to use it at any time
in the future we can easily arrange about that. All you will
have to do is pay us a small tax and we will grant you per¬
mission. If the public should ask what the publishers
"propose to give it in exchange for the relinquishment of the
right, the answer will be : — “ Nothing 1 " Could anything
be more absurd.

Restricts Personal Liberty.

• In the case of a sound record, such as a Grapiiophone or'
Gramophone disc, the effect of the amendment would be to
interfere with personal liberty in the use of the voice or of
musical instruments. The merit of the sound record is due
to" other factors than the musical composition. Its merit,
popularity, and saleability depend upon the artistic ability
of the performer or performers upon their renown," and the
excellence of their rendition. " It is a faithful reproduction
of the individual performance,- preserving not merely a

If the publishers are given the right to control sound
records what is to prevent them from saying that it is un¬
lawful for a vocalist to sing a composition anywhere, m a
drawing room, a talking machine laboratory, or where you
will, without their permission and the payment of a tax I

Meohanioal Devices Entitled to Protection.

, Enormous labour and capital have been expended upon
the invention and perfection of these devices, and upon the
processes employed in the making of sound records.

Those who have put their money, their energy and their
genius in the inventing and perfecting of these devices and
processes are just as much entitled to protection as the
composer or publisher. They have been promised protection
.by the patent laws, which say they must be protected. They
have gone on in the conviction that what they did they had
a perfect legal right to do. They have built factories, given
employment to thousands of working men, and have invested
their capital in the business. . They have conducted long and
costly experiments which have resulted in discoveries of
immense value to science, and which- have added immensely
to the educational facilities of the public.

Their interests are vested legal interests which are threatened
by the proposed amendment which seeks to take away the
value of these interests and to destroy or hamper an industry
with the creation and development of which the composers
and publishers have had nothing whatever to do, and which
has not changed in any single particular the rights enjoyed by
them, except to make them a hundredfold more valuable bv
augmenting considerably the sales of the copies of their
published compositions.

Patent Legislation Should Not Be Incorporated in Copyright
Enactments.

Mechanical devices are the creature of patent laws and are
properly controllable by them. Patent law, while a cognate
branch, is radically distinct from copyright and a provision
as to patents and inventions has no more place in copyright
legislation ' than protection of a musical or literary work
would have in a statute as to patents.

The rules of procedure are radically different and. an
attempt to combine them would; result in the. greatest
confusion and uncertainty. - ■ -- :::

By the proposed amendments, for example, an important
class of mechanical devices would be subjected to radical and
unfair- discrimination, and become , subject to special pro¬
cedures and remedies not applicable to any other.mechanical ;
devices. It is a legal absurdity— an abnormality abhorrent
alike to law, and to that even handed justice to all which the
■law typifies. - -

The loss already inflicted upon - the talking machine
industry has been, enormous. The actual cash paid out in
France and Italy as past indemnity, and for the labels which
must be affixed currently to the records sold, amounts to
several hundreds of thousands of pounds sterling, no part
. of which will ever be recovered. The sums spent for counsel’s
fees, court costs,- printing and the like in those countries,
and in Germany, Austria, Hungary, and Belgium amount to
many thousands .more.

The manufacturers have been subjected to every imagin¬
able annoyance and interference, with the view of coercing
them, into acceptance of terms. The disturbed and . un¬
settled conditions induced by this agitation and its consequent

The form of the proposed amendment is somewhat different
from the publishers' previous proposals, but the substance
remains the same. In any event the result would be to.give
them a monopoly.

If permission be granted to transfer a work it will be given
only in exchange for a royalty or tax . to be fixed by the
publishers, and this tax it may be readily understood will be
a heavy one. The tax once established, all, subsequent
grants will be upon the same basis. This . leaves the way
open for manipulation. By collusion between the publishers
and the manufacturer to whom permission is first granted
the tax can be set so high as to make it prohibitive'for others.
By demanding from such others the same tax which the
original cessionaire may agree to pay, the monopoly will be
complete. Of courss the original cessionaire may arrange for
a series of .rebates whereby the actual tax will be a nominal
one, but equally of course this feature of the arrangement
•will be a secret one.

It is no answer to the above to say. that provision is made
for legislation in each country to fix the tax in case of a
\ dispute. . Before legislation could be secured or a case be
-carried through -the courts the monopoly would be fully
. established and hard to destroy. The matter should not
be left in that inchoate state. If the public is. to, surrender
its right it' should be. on conditions sufficiently defined' and
accuratelv expressed as to avoid all possibility, for, appeals
■ -to the courts or the legislature.!

The leopard does' not change-his.spots. This is, a gigantic
speculation involving millions, and the speculators .' and

[ENCLOSURE]

. ' . 28

publishers, who have poured out their money in promoting
the scheme are not going to abandon their aim at this. late
date. They have not changed their minds. They are as ’
determined as ever but they have reconnoitred the ground
and they are proceeding more warily ; they are trying to
cover their' real purpose by hypocritical zeal in behalf of the
author, but in their hearts they are crying monopoly.

The Inconsistency of the Publishers.

The publishers pretend that the inclusion in the catalogues
of talking machine records of selections, taken from their .
repertoires works them great injury, and is a hindrance
to the sale of their printed copies of the same selections.

That this is untrue is shown in the conclusion reached
by the Austrian Court previously quoted. The issue was \ l

squarely raised in that case and the court determined it
in the manner stated.

•The pretension is put forward by the publishers as a 1 . ' '

■ justification for their attitude but it is not put forward
in good faith.

If an attempt were made to absolutely prohibit by legislation
the recording on talking machine records of selections from
their repertoires the publishers wduld be the. first to come
forward in protest, and their voices would be loudest in
denouncing an attempt of the kind.

They realised, long before the Austrian court had an ;
opportunity to pass upon the question, ' that the talking
machine offered them thevery best medium, without regard
to cost, they have ever had for popularising and advertising
their .productions and they have used it freely and unsparingly.

That .it has been a cheap medium also has been quickly
appreciated by them.

There is no manufacturer of talking machine records
of any importance who has not received hundreds, and. in
some cases thousands, of letters from publishers and authors
requesting to have their songs recorded. In many instances
payment has been tendered.

There is at least one music publishing firm in Great
Britain which prints on each copy of music issued a state¬
ment that " Talking machine records of this song are made
by The — — — Record Company.” There are others,
which have standing' arrangements witk manufacturers
whereby their productions are insured this form, of publicity.

In the course of the hearings before the Joint Committees
of the American Congress previously referred to, one
prominent manufacturing concern "filed’ hundreds of original .

letters from, publishers— some of them of considerable-
prominence— from allover the-ebuntry asking to have their
selections recorded. Some of these letters frankly admit ’ ' •

that the talking machine has been the most helpful aid in
stimulating the sale of copies of niusic the publishers have
ever known. Some of the letters thus produced were from
firms whose representative was present at the hearing to
protest that the talking machine was a hindrance to the
sale of the copies.

It must be clear from the above facts that the publishers are
inconsistent, at least, in pretending that they have been
wronged in this way, for, if a. man be wronged by an act
of another, why should he request and urge that other
tp continue to do that which inflicted the wrong?

Sowing the Whirlwind.

In the short space of nine years hundreds of thousands
of pounds have been spent by the manufacturers in re¬
sisting the attacks of the speculators. In no fewer than
eight different countries have they been forced to defend
themselves against ridiculous and absurd demands put for¬
ward by these covetous speculators who seek to lay a
popular industry under tribute. In five out of the eight
countries the courts have ruled in favour of the manu¬
facturers. In one the court, in a weak spirit of compromise,
gave the speculators a half loaf, and. in the other two the
final decision is yet to be rendered.

If the proposed amendment be adopted at Berlin there
will be a new crop of lawsuits in every country which par¬
ticipates in the Conference.

What the results of these suits will be it is impossible
to foretell, but one thing is absolutely certain, and that is
that if the publishers are granted the " rights " (?) which,
they so boldly claim, no manufacturer of mechanical devices
will be allowed to conduct his business in security ; the
ordinary laws of the land will be powerless to insure him
that liberty and pursuit of happiness which is guaranteed him
under all just governments.

Why this condition of affairs should be created at the
behest of a group— no matter how powerful— .of speculators
it is difficult to. understand. . .

If' something of value were given or even offered in
exchange for it it might be debatable, but as nothing of
, ' 'the kind has occurred it savours too much of spoliation
directed not only against a single industry but against the

Nor will the gift of these alleged rights content the pub-
. lishers . and speculators. Once the principle, that- the
composer and the publisher are entitled to a complete and
; absolute monopoly of a musical idea as well as to the graphic
representation of that idea, is recognised, the publishers',

who are in ninety- nine cases out of every hundred the owners
of the copyright, will find ways and means of laying other
industries under tribute— of taxing more and more the
public.

The Publisher Amply Remunerated Under Existing Law.

For a merely nominal fee (in Great Britain 5/-), paid at the
date of registering, the copyright is granted for a definite
period. No other fees arc payable to the Government during
the lifetime of the copyright.

On the other hand the inventor who patents a new and
useful invention pays (in Great Britain) £5 os. od. before
the sealing of the Letters Patent, and thereafter, in order
to keep the patent alive for fourteen years, must pay to
the Government in certain instalments, £150 os. od. If
the inventor fails to pay any of the. instalments, as they
become due his patent lapses and becomes public property.
In many countries also there are provisions as to adequately
working the invention, and failure to comply with these
provisions, irrespective of the payment of the annual tax,
also works a forfeiture of the patentees’ rights and causes
the patent to lapse and the invention to.fall into the common
fund.

No such restrictions or fees are imposed upon the owner of
copyright. One fee only, and that a mere pittance, is
exacted and thereafter he enjoys unique privileges for a
long period of time. .

On every printed copy of the idea which the public
buys, the owner of the copyright has imposed his tax and
that this tax is ample is shown (a) by the fact that every
music publishing house of any age is wealthy. There are
few. if any poor music publishers, (b) The profit on every
sheet of music sold, calculated upon the actual manufacturing
cost, is several hundred per cent. This is notorious.

Every person who buys a sheet of music' or the score
of an opera or operette pays this tax. The artiste who
sings in a drawing room has first to purchase and study
the music and has paid the tax. The amateur, the student,'
and the' talking machine manufacturer all contribute, and
the latter, as much as any of them because he must have
the music before he. can make his. sound records. '

Thus the publishers would levy a double tax upon the-,
talking machine manufacturer; and, if their Scheme carries,
upon the artiste, the student and the amateur as well.

CONCLUSION.

A brief recapitulation will be useful.

It is urged that the proposed amendment to the Berne
Convention

A. Is inspired by and is the direct result of the raid
inaugurated by the man Lucien Vives in Paris
in 1898 or 1899. That Vives was a rank outsider ;
neither author, composer nor publisher, but a
speculator pure and simple ;

B. That his success, due to the social' and political
aid and influence of wealthy and influential
publishers, and to a weak spirit of compromise
on the part of the French Courts, has excited
the cupidity and greed of ah international group

. of publishers and speculators ;

C. That authors and composers, as- a class, do not
benefit by the proposed amendment and have
had no part in the agitation for its adoption ;

D. That the proposed alteration of the law is contrary
to. the interpretation of. copyright legislation
-which has prevailed for nearly two hundred years ;

E. That the final courts of five different countries
have ruled against such interpretation within the

past three years

F. That the final court of only one country out of eight
has even partially recognised the claims of the
speculators and- publishers ;

G. That the recognition, in the proposed form, of
these demands would , constitute confiscation,
without' just compensation, of rights which the

■ public -have enjoyed for two centuries ;

H. . That it is contrary -to the* spirit and intent of the

•I. That it is an invasion of the domain of patent
: law: by copyright legislation, and, as such, danger¬
ous and tending to introduce great confusion into
a branch of legal procedure in which due. regard .
for- the interests of the oublie demand nrent

J-idiaon V.'orka ,

Vlllesdon ,

London, 1J.W. ,

4th .August 1909.

Sho Secretary,

She Committee on Copyright,

Board of I’rnflo,

YThitehall Curdons , s.«,

r.ir, ,

Tho attempts which aro now
tho existing Copyright T.&vv so no
todtion of rausioal o opyrlgihts to Talking Machine
Kcoords and perforated I'ueio Rolls, aro of vital
interest to tho phonograph ana other manufacturers
whoso output is to ho affootod hy tho proposed ohangos.
Tho Berlin Oonforenco raoomnendod this extension of
copyright protection, and if our intorosts aro properly
safeguarded wo should wo looms and support what ovor
recommendations the Cojaaittoo may make to His Majesty’s
Covornment. It is to ho roraomhoroa , however, that the
proposod now right whieh is to ho granted hy statute
nevor before oxisted in this oountry.it is tho oreation
of a new class of property, and it 1b to he oroatod at
tho oxponBe of industries whieh have developed along

-1-

hoingj made to amend
to oxtond the pro-

X _ i _

certain narrow lines and in which millions of pounds
havo boon invested. The phonograph industry is now
about tv?onty years old, and since its very birth
phonograph records havo boon inado of the current
popular music eo that- usoro of tho phonograph havo
been kept in touoh with the various musical publica¬
tions as they oamo out Just as renders of newspapers
a jo kept in touch with items of current news intoroBt.
The phonograph business in fact bears a much closer
analogy to tho newspaper business than to tho musio
publishing business. Phonographs are of many typeB,
some using oylindors of various diameters end others
discs, but no matter what kind of machine a UBor might
have ho lias heretofore always been able to obtain for
uso with his maohlno tho record of any current popular
musical work. To materially ohango tho situation -
to say to tho phonograph manufacturers that they shall
not uso current music as it may bo published, or to so
modify tho law that one favoured manufacturer might bo
oblo to monopolise the best part of musical compositions
to tho exclusion of his competitors - would work a very
great hardship on these industries which have been per¬
mitted to dovolop along this particular line and undor
the protection of law. Hot only havo tho Industries
boon pormittod to develop along this lino but they havo
actually been importuned to so dovolop by the music
publishers thomsolves , who , alfc'ost without exception
in the past, havo boon only too glad to permit tho
phonogoaph manufacturers to use their sheet music end

-2-

thereby make It popular. If the law hud always boon
broad enough to Include and bo Infringed by the publica¬
tion of phonograph records it is elccr that the various
talking raeohine manufacturers 1r. electing to devolop
their business along this particular channel would hove
done so at their poril; but such has not boon tho law,
end as wo have r.nift, this particular development has
taken place in a perfectly valid and lawful manner,
iividonco has been presented to the Committee shewing
that attempts have been made on tho part of one power¬
ful manufacturer to nonopoliso a largo part of the
musical compositions by contracts with various important
publichoi'S; a similar attempt was undo in the United
States, and tho recent lav? in that country was there¬
fore so drawn as to protect tho Talking liaohino manu¬
facturers from tho evil ooncoquonooB of monopolication
by a system of oompulsory lioonoo. Uhothor the Oom-
mittoo may or may not bo satisfied with the suffioionoy
of tho evidence on this point, the fact cannot be denied
that such a scheme would not bo vory difficult to carry
into offect. f< compulsory liconse is not repugnant to
British institutions but is included both in tho British
and Canadian Pat ont T,aws. The musical composers ouighb
not to object to it because they will derive a substan¬
tial income by tho awurd to thorn by the Government of a
newly created property right. The manufacturers on the
other hand aro vitally interested in the question of
compulsory licenses beoauBo otherwise there ia grave
danger of their industries being irroparably injured.

l’ho nao easily for a provision for compulsory
license betas recognised the quodtlon of the mount of
the royalty arises. In fho statement of noth ”ey 1909
presented to tho Committee by tho Gramophone Company
limited , with praotionlly all of whioh wo fully agree,
it is suggested that tho amount of the royalty should
bo 1& for each reoord. Such a royalty nan bo readily

paid by tho Gramophone Company whoso records boII from
ii/- or more up to 12/- or more, but in tho oaso of
Kdison rooords, which soil for 1/-, tho royalty :le
prohibitive. fho so Kdieon rooords soil to the public

for 1/- but they arw sold to faotore for 6d. fho
cotikal cost of tho rooords including tho oxpense of tho
artist employed, mutoriol used, making moulds, obtain¬
ing oopios there from, with advertising, soiling end
other oxponaos, is not far from 6d, so that a tax of
ld per reoord would bo equivalent to a tax of 100 per '
cent, on tho mennfao turor ’e profit. A tax of $a per
record would bo equivalent in tho oaso of lid is on ro¬
oords to 25 per oont. of the menufeo turor ’ s not profit.
Wo see no reason why this tax should not bo increased
in the oaso of rooords soiling for higher priooK either
proportionately or on a rants imum end minimum sliding
scale.

She United States law provides that tho royalty of
2 oonts or 1« per reoord shall bo paid on all rooordB
manufactured embodying copyrighted musio whether sold by
the aenufao turor or not. Shis was obviously an over¬
sight on tho part of tho American law makers due to the
faot that tho Amorioan Copyright Bill was pressed

through Congress In tho ovoning of March 3rd 1909 a few
hours before adjoumnont on the following day at noon,
thidoubtoftly this error will ho corrected at the next
regular aotsslon oammenclng next Decombor booauno It Is
now recognised to ho a moot harsh arm unusual provision,
Binoo all manufacturers carry very largo stooks of re¬
cords in anticipation of sales which frequently never
materialise and a considerable proportion are consigned
to the Bcrophoap.

’’o would respectfully submit that there should
nlso he a provision in the .taw to provide for records
■which, b3 though sold to factors or Seniors, are lator
rotumod to tho ttcunfcioturorB uu boing unealeahlo, end
for which full allowance has to ho undo, hecauso it Is
obviously unfair to require the manufacturers to pay
royalties on records which they arc forood to telco hack*
It has been found in practice so far as fho national
Phonograph Company tir.itod in conoomod that these re¬
turned roc or da amount to 10 per cent, of tho total
sales, end a fair arrangement thoroforo would ho to re-
(in iro menu foe tamers to account monthly to tho copyright
owners for 90 per cent, of tho royalties pcyablo to thorn
the holnnoc if any being adjusted annually.

We ore heartily in favour of the suggestion whioh
has bean made to tho Oommittoa of including in tho pro¬
posed law a provision for copyrighting tho phohogrnph
records themselves so far no thoy mey ovidonoe original¬
ity in production or special nrtlotio quality. Such a
provision in the law would pat a stop to the piracy of
records by unscrupulous end dishonest persons who might

-5-

thoroby aool: to ovsdo tho payiaont of royalty.

',71th these suggestions so far sb our interests are
oonocraod we believe the now Copyright Aot would repre¬
sent e fair and reasonable compromise between neooBsar-
ily conflicting interests which on our side are in the
nature of vested rights.

•V© are, Sir,
lour obedient flervahtB ,

ESI-: HAEIOB/.T. T’UOItOffi'.AHl OOMP.AIJY, limited.

Director.

-6-

along that lino, and to do that would' mean that th_
newspaper would have to go out of business in about a
week; and if you take that right from us we should
have to reorganise our business. We should have to
use music whore the copyright has expired, or employ
people to write musio for us; and I think since the
Committee is recommending the granting of a now.

heavy to:

impel thi A ...

published his work at all. to allow it to bo UBed on the
gramophones P — Either that or to do as they have done
in America, to provide that the composer, if he wants
to, shall have the right to prevent its being used at all,
but if ho has given the right to any manufacturer, then
I think any other manufacturer should have the right
to use it. Mr. Yiotor Herbert said he objeoted to some
of his work being used on the gramophone; he thought
it was not dignified. But if he wants it played on ono,
then all ought to have the samo right. If he does not

ion all ought t<

•ant it publisher.

3641. You ul _ _ _ _

thinks it undignified and does not want it published on
talking-machines, ho ought to have the right to say: it
shall not be so published.

3042. Do you think it right that he should bo
restricted in Ins power to grant the right to the first
manufacturer?— I think so in view of the special cir¬
cumstances. If the law had always been broad enough
to include talking-maohines, and the talking-maohine
manufactures had developed their industry along this
lino, then they would have done so at their own ™ril •
but they have developed it lawfully and legally, oi

publishers. Thorofore

aaohineP — Yes. If he

>t request of many of these m

partioul

way,, and those interests ought to be pro-

would bo impossible to carry
musio publisher might make a

contract with one mnnu-

„ „ - t with a secret rebate. that

could never be detected, and that price would be pro¬
hibitive to anybody else. It would be just os possible
to make monopolies os it would be if there wero
nothing at all in that way.

3644. That would be only so in the case of decep¬
tion P— Yes.

8645. (Mr. Aahoith.) If copyright is given in the
production you may make on the gramophone or pho¬
nogram, you get a new right. which you do not possess
at present P — Yes.

8646. Would you knvo the compulsory licence apply
also to those now rights P — I have not considered that
point,, but I have no objection to that being done, if
the Committee thinks it. should be.

8647. If that is done, the Government or whoever
decided the .prico, would have to go into what was . the
groper figure tomsure a,ocunpulsory licence from diBc

~ ‘ . lassed

idt royalty
would be

' 3649. Andos I ui

- - indicate that the legislature

7 successful , in fixing a price?— I

3651. Would not you have made a much better
■rgain yourself if you had, been left to .deal with the
irsona whoso productions you were taking P—Iamnot
ile to say os to that. We were confronted with., this

3709. (Chairman.)

Legal Department Records
Phonograph - Correspondence

Higham, Daniel

This folder contains correspondence and other documents relating to
Daniel Higham's patents on mechanical amplification devices and to Edison's
interest in his work. The selected documents cover the period 1902-1904.
Among the correspondents are Higham, Edison, and their respective patent
attorneys, John B. Moran and the firm of Dyer, Edmonds, and Dyer. Included
is an option agreement between Higham's High-Am-O-Phone Co. and the
National Phonograph Co., along with numerous items pertaining to the
execution and disposition of the agreement.

Approximately 50 percent of the documents have been selected. The
items not selected include printed patents, letters of transmittal and
acknowledgment, and documents that duplicate information in selected
material.

Mr. Edison:

Here is a letter from Moran. Will you please let me have
the memo . that he refers to? I am also sending you copy of the
proposed form of agreement. Please let me have your comments on this
letter.

I am also attaching a letter from Dyer relating to the Higham
patents.

Kindly look these* over and send them hack to me at your conven-

[ENCLOSURE]

JOHN' B. MORAN, ) O'

20 Pemberton Square, Boston, Mass.

0 0 0

Mr. ■(]. E. Gilmore,

Edison Lavoratory,
Orange, N. J.

Dear Sir,-

So-i-few o,.

..D.e.o.,....3.0.,...i.9.0.a, . I.

I find that you have included in your agreement,
mailed to me a few days since the Canadian Patent.

In the conversation which took place between Mr. Edison,
Mr. Kigham and myself there was no talk whatever about;
the Canadian Patent. I am informed by Mr. Higham that
in no talk which he had in my absence with either Mr.
Edison or yourself was the Canadian Patent mentioned.

Our talk was based entirely upon the United States
patents. The United States patents are owned by the
American Phonic Company. This company does not own
the Canadian Patent or any other foreign patent. If
you will examine the memorandum which is in Mr. Edison's
possession in my handwriting, a copy of which In Mr.
Edison's handwriting is in my possession^ you will find
that it has no reference to the Canadian Patent.

I notice also in your form of agreement that
you make the payment three months from date, fourteen
thousand dollars. By reference to the memorandum
of agreement in Mr. Edison's possession you will find
that there was to be one thousand dollars paid for the

[ENCLOSURE]

option,, the first payment thereafter was to be fifteen
thousand dollars, and the balance fifteen thousand dollars
to be paid in sixteen months.

Please 'confer with to. Edison about these
matters, and using your blank form of agreement as a
basis I will prepare a form of agreement satisfactory
to us.

Respectfully yours.

[ENCLOSURE]

finmuf/GM,,,,

> o . .-ss-fa. o o

'jfiteut&f; "KwIZ'm,. Jr*-

■ 'j/.sl£,tr>,,.„, MM2M0 C<»1

ty&tt/ j%^'^Dece^er~31 ,

William E. Gilmore, Esq. , ' j

Presdt. National Phonograph Co.,1 jam i 1903
Orange, N. J. j

AN8. . .

Dear Sir,-

In accordance with your favor of the 26th inat. , we
have again carefully examined the two Higham patents, and
have considered the possibility of reissuing them so as to
secure additional reissued patents limited to talking ma¬
chines.

Higham Patent No. 678. 566. — — In' this patent the in¬
vention is Illustrated in connection with a number of dif¬
ferent uses: first, as a megaphone, to amplify spoken

tones; second, as a megaphonio telephone transmitter, to
amplify spoken tones and transmit them telephonioally;
third, as a megaphonic telephone receiver, to amplify the
received tones; fourth, as a megaphonio phonograph record¬
er, to make amplified records; and fifth, as a megaphonic
phonograph reproducer, to amplify the reproductions. In
every instance, however, the same invention is present, the
apparatus using a primary vibrating means, a secondary vi¬
brating meanB, and an interposed frictional means. Under
the law, patents are only reissued when they are invalid by
reason of an Insufficient or defective specification or some
other equivalent error, as for instance when the claims are
' 1

[ENCLOSURE]

either too broad or else are ao narrow aa not to properly
cover the invention. The law does not provide for reissu¬
ing patents in order that separate reissue patents may he
secured covering the several uses to which a single inven¬
tion may he applied, and even if such reissue patents were
secured, we douht if more than one would he valid, as they
would amount practically to a number of patents covering
the same invention. We therefore do not believe that this
patent can he reissued, at least as Mr. Edison suggests.

Of course if the claims are too broad, the patent could he
reissued so as to properly narrow them, hut that can he done
at any time. It is only when the attempt is made to broaden
claims by reissue that an inventor is required to he diligent
in mating his application for reissue.

In the draft of contract which we sent you, we did
not bring out the point, which can he included in the papers
when returned, namely, that any litigation under the patent
relating to talking machines shall be under your charge,
with the right on your part to use the name of the licensor
as complainant in any suit for infringement. This, we

think, would fully cover the point which Mr. Edison apparent¬
ly has in mind.

Higham Patent Mo. 712.930. - We assume that this

patent covers the specific arrangement used when the inven¬
tion is employed for amplifying phonographic reproduction.

The only arrangement Illustrated and described is a phono¬
graph, although the claims in terms are broad enough to In-

[ENCLOSURE]

elude either a megaphone or a telephone. The first claim
of the patent is somewhat obscure, and on its face is capa¬
ble of being read on the arrangement shown in figures 1 and
2 of Higham' s patent No. 678,566. That claim, in our
opinion, would only be valid when limited by implication
to "elastic means independent of the primary vibrating means
to increase the pressure". This fact might be utilized as
a justification for securing a reissue of the patent. In
such a reissue the original claims could not only be seoured
(the first being limited as above suggested), but additional
claims could also be obtained limited to talking machines
and covering the special arrangements, such as the floating
weight, the adjustable independent spring, etc. If such
a reissue patent would be desirable, we recommend that the
attempt be made to obtain it.

In this connection we would like to have Mr. Edison's
opinion aB to whether the invention of the first Higham pat¬
ent No. 678,566 is included in the apparatus disclosed in
the second Higham patent No. 712,930. In the first patent
the statement is made that -

"It is advisable that the coefficient of friction of
the frictional contact upon the moving surface Bhould
not be much, if any,. more than one, or. in other words,
the frictional force set up by the moving surface should
not be more, if any, than the pressure holding the parts
in contact." (page 3 lines 10 — 16)

In order that such a relatively low coefficient of friction
may be utilized, the patent emphasizes the necessity of em¬
ploying lever means, -

[ENCLOSURE]

"whereby the frictional Titrating force can he increased
as the ratio of the increased mechanical force of the
l«Ter means with a coefficient of one." (page 3 lines
34—37)

These limitations were introduced to distinguish the Higham
construction from the construction of the Hope-Jones patent,
in which we understand the friction shoe is pressed on the
friction wheel by the direct vibrations of the primary means.
Referring to the second patent, you will notice that the
lexer D is pivoted almost at its center, and we should there¬
fore say that in this construction the coefficient of fric¬
tion of the shoe L on the roller C was very much more than
one, as defined in the first patent. If this is so, we
doubt if the second patent embodies the invention of the
first patent, and in that case it might be possible to re¬
issue the first patent so as to leave out the objectionable
limitations to any specific coefficient of friction, and to
distinguish from the Hope-Jones patent in some other way.

If you will advise us what Ur. Edison's idea Is on thiB
point, we will again tales up the patents should you desire it.

Yours very truly,

/fu.< *i' '

JOHN B. MORAN,

20 Pemberton Square, Boston, Mass.

Mr. E. G-ilmore,

Edison Lavoratory,

Orange, N. J.

Jan. 5, 100S

i<jo

Dear Sir,-

Your letter of Jan. 3rd Inst, at hand, in which you
acknowledge the receipt of mine of the 30th December on January
2nd, and in which you also state that you supposed that Mr.
Edison had given you all the facts in the case before you had
the form of agreement drawn up but that he probably overlooked
q uite a few items, and in which you ask me to prepare a form
of agreement as I understand it, and that you will then, on
receipt of my form of agreement,take it up and arrange for a
meeting of all parties in interest.

I assumed when we were talking with Mr. EdiBon that
any proposition he discussed with us would be by him at Borne
time submitted to the directors of the National Phonograph
Company. As he was informed by us that Mr. Higham and I did not
own the United States patents but that a company or corporation
did, I assumed that he must have supposed that on that account
the matter of agreement would have to be referred to the' direct¬
ors of our company.

In my laBt letter to you I stated to you what Mr.

Higham and I supposed was the proposition which Mr. Edison
made to us and which was to be submitted by us to the directors
of our company. As we understood his proposition it did not
include the Canadian patent but included merely the United States
patents. The form of agreement which you sent us after having had

toAto*,, . . i<jo

your talk with Mr. Edison included both die United States and the
Canadian.

Our corporation owns, as I informed you in my last
letter, only the United StateB patents and iias' nothing whatevey'to
do with the Canadian patent or any other foreign patents, and
therefore it was utterly useless for me to have the directors
meeting called of our company and submit to them the proposition
which you embodied in the form of agreement, for as our company
doesn't own the Canadian patent its directors cannot vote to
comply with the terms of your form of agreement.

X assumed that after notifying you in my last letter
that your form of agreement included the Canadian patent and that
our company did not own the Canadian patent that you would follow
the suggest ion made by me and talk the matter over with Mr. Edison.
I assunedthat as a result of such talk with Mr. Edison that he
would inform you that our views of the talk between himself, Mr.
Higham and myself, were accurate, and that he would agree with
our views that the Canadian patents were never talked over by ub.

You ask us now to prepare a form of agreement as I
understand it. I have already stated to you that Mr. Edison had
in his possession in my handwriting a copy of his views which Mr.
Higham and I were willing to submit to our directors, aad which
we believed we could induce the directors to adopt. Of course
I know that preliminary talks between Mr. Higham,Mr. Edisonpid
myself are not binding upon any corporations, for I assume that

JOHN B. MORAN,
20 Pemberton Square, Boston, M

fyo-tfto-tO, ■

l<!0

the National Phonograph Company by vote of the directors has not
authorized Mr. Edison to make any contract and I know that the
American Phonic Company which owns our United States patents,
has not authorized us to make any contract. The talks between
Mr. Edison and myself were merely to get at a basis of arrange¬
ment which would be submitted to our respective corporations
and in the hope that by those corporations they might be embodied
in the form of contract.

The inclusion of or the exclusion of the Canadian
patents is of vital ccn sequence, for if Mr. Edison is unwilling
to make us an offer for the United States patents alone the
directors of the American Phonic Company can not do business
with him. If on the other hand he is willing to make an
offer to the American Phonic Company for the United States
patents of one thousand dollars for a three-months option,
fifteen thousand dollars to be paid at the aid of three months
on the signing of the contract by the companies, and fifteen
thousand dollars in monthly instalments for a period of sixteen
months from the signing of the contract, I will cause a meeting
of the directors of the American Phonic Company to be immediate¬
ly called, will lay Mr. Edison's proposition before them, and
hope to be able to satisfy the directors, of whom Mr. Higham and
I constitute a minority, that the proposition ought to be accepted.

Therefore for the purpose of facilitating matters I
suggest that you or Mr. Edison send us in writing a proxiosltion
which I, upon receipt thereof will submit to our Board of Directors.

_ i .

If they consider your proposition favorably I will advise the
Board of Directors to authorize Mr. Higham and myself to sign
the contract and to arrange all the minor details thereof.

"iVhen this is done, by calling a meeting of the Board of Directors
of the National Phonograph Company, by said canpany authorizing
some person or persons to sign the contract, Mr. Higham and 1
with such authority as I have indicated to be secured by us,
with the persons authorized by your company will be able to sign
a binding contract.

Inrref erring in this letter to the purchase of the
patents I refer not to the patents themselves but to a license
to use out? patended apparatus for talking machines only.

I refrain from drawing up a detailed form of contract embodying
my own views because it might not be satisfactory to our Board
of Directors, and I don't care to go to the trouble of calling a
meeting of the Board of Directors and discussing the subject in
detail until I have some reason to believe that our company and
the National Phonograph Company cam arriye at a reasonable basis
for an agreement.

If it were not for the injection of the Canadian patents
by yourself and Mr. Edison into the fbm of agreement which you
sent us I would have had a meeting of our Directors before today,
and probably would have had a favorable vote thereon, accept as
to one clause wherein you bind Mr. Higham to render personal ad¬
vice etc. for a period of five yearsj and also would probably
have had authority with Mr. Higham to meet the authorized agents
of the National Phonograph Company to sign a binding contract.

The American Phonic company has no control over Mr.

LAW OFFICE. )| ' .

JOHN B. MORAN,

20 Pemberton Square, Boston, Mass.

_ _ SoAtW, . ”5~. . /f0

Higham' s personal services and any arrangement for his services
would necessarily have to be made by ihe National Phonograph
Company with Mr. Higham personally. I have no doubt satisfact¬
ory arrangements can be made with Mr, Higham personally in the
event of the contract being made by the two companies. I doubt
however that Mr. Higham would be willing to devote himself for
the number of years indicated in your proposition to the service
of the National Phonograph Company.

In addition to your proposition I have two
others to submit to the Board of Directors at the Board's
first meeting, but I desire personally to have yours submitted in
its most favorable form.

I aBSune of course that Mr. Edison may be
absent frcra the city and that you will be able to communicate
with him inside of four

or five days.

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January 8, 1903.

Thomas A. Edison, Esq.,
0 r a n g s

Dear Sir:-

¥e have again considered the Higham patents in
view of your oral instructions last night.

First Higham Patent. Ho. 678.566.

The idea stated in this patent is to secure an am¬
plification of sound vibrations by arranging a lever means
between the brake-shoe and the primary vibrating means, so
that the variations in the friction will be correspondingly
greater than if the primary vibrating means actuated the
friction shoe direotly. The essence of the invention is
the use of a lever means between the friotion shoe and the
primary vibrating means. If these lever means oan be
omitted, the patent will not be' infringed, but apparently
this cannot be done, since, as we understand it, the pull
of a brake-shoe would be lesB than the pressure of the pri¬
mary vibrating meanB if applied direotly to the brake-shoe.

The first claim covers the Invention very broadly,
and is comprehensive enough to include the arrangement wheat
used in connection with. phonographs, telephones or megaphones.

The seoohd claim covers the compounding idea, and
although not limited in termB to lever means, this limitation

(T. A. E., 2)

must be implied in view of the specification.

We have not made an examination of the art, hut know
of no reference which anticipates the claims. In the case
of pianophone attachments (Davis patent No. 546,582, Septem¬
ber 17, 1895, copy enclosed), very slight movements of the
contact fingers are amplified into much greater movements
of the keys through the intermediation of a brake-shoe en¬
gaged magnetically with a revolving roller. In order that
such an arrangement could be regarded as the equivalent of
the construction of the first Higham patent, it would have
to be held that the magnetic arrangement was the equivalent
of lever means. We do not think this could be done, es¬
pecially because with pianophones the friction shoe is not
in engagement with the roller, as with the Higham
patents, while the vibrations dealt with are not sound vi¬
brations. In other words, we believe that pianophoneB are
not sufficiently suggestive of telephones, phonographs or
megaphones to be effectively cited in anticipation of the
Higham patent. Of course, you may find suggestions analo¬
gous to Higham's arrangement, dealing with sound vibrations,
and in that case the Higham patent may not be valid and
might have to be reissued so as to contain additional claine
limited to phonographs. We should say, however, that in
view of the utility of the Higham arrangement, and of the

(T. A. E., 3)

new and improved results secured, the patent will he looked
upon as favorably as possible by the courts and its claims
sustained unless clearly anticipated.

Second Higham Patent. No. 718.930. November 4. 1902.

Does this, patent embody the invention of the first
patent? We should say not, because the lever D seems to be
pivoted substantially at its center, so that variations in
friction due to the vibration of the reproducer 1 would be
substantially the same as if the reproducer acted on the
brake-shoe directly. If this arrangement is operative for
amplifying sounds ~ and the patent refers to it as "a more
effective construction and combination of parts for the
friotion means" — , it is questionable whether the first
patent brings out the essential features. It would appear
from the second patent either that its construction was in¬
operative or else that the claim in the first patent to
the great advantage of employing lever means was unfounded.

The first claim of the second patent, as we wrote
Mr. Gilmore on December 31st last, is broad enough to be
read on the first patent. If, therefore, the construction
of the second patent is operative, there appears to be suf¬
ficient justification for reissuing this patent, in which
event additional olaimB can be introduced oovering phono¬
graphs .

In view of the second patent, we must say that the

(T. A. E., 4)

first patent does not stand out so conspicuously and clear-
cut as it apparently did at the time of its issue, and we
think that before the option is exercised you should satis¬
fy yourself beyond any question that the lever meanB between
the primary vibrating means and the brake-shoe are absolute¬
ly necessary, or, what amounts to the same thing, that the
construction of the .second patent is less effective than
that of the first patent* In fact, so far as the second
patent 1b concerned, we do not see how, except in details,
it can be distinguished from the construction of the Hope-
Jones English patent.

Yours very truly,

ELD/™.

Enel.

In re Higham

Newark, N, J. , May 17, 1903.

"Win. E. Gilmore, Esq..,

National Phonograph Co.,
grange, N. J.

Pear Sir:

I have looked over the papers in the above matter carefully.
The only way in which you can put a cloud on the title to the pat¬
ents is to file a bill to compel an assignment of them in accordance
with the postposition which they accepted, and then to file in the
assignment department of the Patent Office a notice giving an ab¬
stract of the bill and a statement of the purposes of the suit. If
any persons wishing to purchase the patents should have a search made
he would then be put on inquiry as to the suit aid your claim to the
patents.

Tours truly,

(Signed) Howard W. Hayes.

Newark, N.J., May 23-1903*

William E. Gilmore , Esq,,

Edition Manufacturihg Oo»

Orange, N. J.

Beatf Sir:-

Referring to your favor of the 22nd inat, in regard to
. the Highan Matter, I would aay that, of courao any sort of statement
or notice can Be filed in the aaaignment division, hut unleaa it ap¬
pears from the statement that you are leaking soma effort to ftnferee
your rights, 1 fear it would hate hut little effect. However, if
the purpose is merely to annoy the owners of the patents a little and:
possibly interfere with a Bale of them, a general notice Betting out
the facts and stating your claim in the matter might have some ef¬
fect, At least it would make a purchaser make inquiries of you be-,
fore purchasing. If you say so, I will prepare Buoh a statement an#
send it up to you for execution.

Yours truly,

HHH/I5D.

MAY 8 0 1«08

Howard W. Hayes, Esq..,

Newark, N. J.

Dear Sir:

I have your favor of the 23rd, with further reference to the
Higham matter. What you purpose doing is exactly what Mr. Edison
thinks would he a good thing. In this conneotion he cited to me a case
where he met'- something similar personally. Some years ago he gave a
letter to a certain party covering some certain application or patent
that was granted to him personally, and subsequently he was put to a
great deal of expense and annoyance due to having written such a
letter. He wants to try the same game on these people. He therefore,
thinks that a statement should be made up and sent to us for execution
to be filed at the Patent office. On thinking the matter over further,
however, do you not think it would be a good idea to see whether the
patents that have been granted to Higham have been transferred recently,
or since the date of the correspondence , as if so, then I doubt if a
statement of any kind would amount to anything.

Yours very, truly,

WEG/IWW

President

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January 7, 1904.

Mr. Daniel Higham,

Wlnthrop, Mass..

Dear Sir:-

Your favor of the 4th inot, has heen reoeived.

The triplicate copies of the option agreement were duly
received and acknowledged by me on the 4th inst., and 1 have consider¬
ed the ohanges proposed by you,- and believe they will be satisfactory
to my principals. The agreement will, therefore, be laid before
Mr. Gilmore for execution.

1 am advised by my Washington correspondents that the as¬
signments sent by you for record, were not accompanied by the neoessary
fees. This matter should be attended to by you.

Yours very truly,

MEMORANDUM FOR MR. ED1SONV

In reference to the search on the Higham patents,

Mr. Hatch reports that according to an article in "La Nature",
an American Engineer named Bataldua in 1897 submitted an idea to
you of transforming the Dussaud Microphonograph into an apparatus
similar to a Stethendoscope for magnifying heart and brain noises.
Do you remember any thing about this?

223aa

OPTION AGREHsENT

u. 8. P.A.TEI'IT omos
FEB V

R e o o :r d e i)

HIGH-AM-O-PHONE COMPANY.
NATIONAL PHONOGRAPH COMPANY
and

DANIEL HIGHAM.

DATTStf^f^A^v. <

(J I

Feb. 2, 1904

..and, recorded ii

RECEIVED for record - ... - - -

, 6s _ 7 page _ 454 _ 0f Transfers of Patents.

IN TESTIMONY WHEREOF I have caused the seal of the
Patent Office to he hereunto affixed.

OPTION agi

age mg made tills ZZ day
A. D. Nineteen hundred and four, Between -

ut irff- AM- 0- PHONE COMPANY

a corporation organized and existing under the laws of
the State of New Jersey, party of the first part; and

NATIONAL PHONOGRAPH COMPANY .

a corporation organized and existing under the laws Sf
the State of New Jersey, party of the second part; and

DANIEL HI SHAM

residing at V/inthrop, County of Suffolk and State of
Massachusetts, party of the third part, WITNESSETH:

WHEREAS the party of the first part is the.
owner of certain inventions relating to phonic appara¬
tus and sound reproducing apparatus covered By United
States Letters Patent No. 678,566 granted July 16, 1901,
to Daniel Higham, party. of the third part, and No. 712, 930
granted to said Daniel Higham November 4, 1902; and

WHEREAS the party of the second part is de¬
sirous of securing an option to purchase the exclusive
right to make, use and sell the said inventions, or any
improvements thereon the use of which would constitute an
infringement of Doth or oft'aither of said patents, which
may he acquired hy the party of the first part'', ■-{
may he made or acquired hy the party of the third part,

- 1 -

• which

A _

HI GH- VTC- O - BHOJflu

V »• HTue-pooii Jjtmqutttj T/ucr joflj.' og-cmgsu -

ViiTSiCCTl *r«f* IFTS •: qrO. 01 ; ... . . •' •

o ~h x i o' jl " y"g k e e k k~ a x • !

during the life of said patents, for the United States
of America, for talking machines of all kinds, whether em¬
ploying cylindrical or disk records, or records of any
kind, not including telephones or wireless telephone or
tele^graph machines;

MOV/, THEREFORE , it is agreed as follows:

1. The party of the first part, for and in consider¬

ation of the sum of One Thousand Dollars (§1000) to it in
hand paid by the party of the second part, receipt of
which is hereby acknowledged, covenants and agrees that
it will sell, assign and convey to the party of the seonAd
part , its successors and assigns, upon the terms herein¬
after stated and at any time prior to May >1 ,; 1^04, the ex¬
clusive right and license to make, sell and use the in¬
ventions covered by said Letters Patent in and throughout
the United States of America for talking machines only (but
not for telephones .or wireless telephone «rr telegraph
machines) , whether employing cylindrical or disk records
or records of any kind, together with the same rights in
any improvements on said inventions, the use of which im¬
provements would constitute an infringement of said patents
or of ei-ther of them, which the party of the first part
may now own or hereafter acquire during the life of said
patents.

11. That, if in the opinion of counsel of the party

of the second part the patent or patents should be re¬
issued v/ith such new claims as-i will in his opinion be more
desirable for the purpose of litigation, the said party of
the first, part will arrange for such re-issue at the expense
of the party O'f the second part, -providing such new claims
as may he proposed will not affect the patent rights herein-j

reserved hy the party of the first part, its successors and
assigns; and the party of the third part, for and in con¬
sideration of the agreement aforesaid, hereby covenants
and agrees to give all possible assistance, hut without
expense to himself, to the party of the second part in the

if necessary, to sign
necessary for that pur-
consideration than
that expressed in clause one and five of this agreement, to
the party of, the second part the exclusive right and li¬
cense to make, sell and use in and throughout the United
States of America during the time covered by said letters
patent or any re-issue of them, for talking machines only,
(not including telephones, wireless telephone and tele¬
graph machines , ) whether employing cylindrical or disk
records or records of any kind, all such improvements on
said patented inventions as would if used constitute an
infringement on said patents, which the party of the third
part now owns or may hereafter acquire during the life of
said patents:

111. That the party of the second part shall have the

right to litigate the patents as already issued or any re¬
issue of same, so far as they pertain to talking machines
only, and in that case such measures shall be taken by the
party of the first part that' the title to said patentsor
patents or any re-issues of same shall be so placed that the

any documents -which may be lawfully
pose, and .to assign, without further

said party of the second part can conduct any and all such
litigations; and the party of the first part further agrees
that they will aid the said party of the second part in
every way by signing all necessary papers, documents, etc.,
as may be required for the futherance of such litigation:

'The expense of such litigation shall be borne entirely by
the party of the second part and the party of the first part

- 3 -

• fjyVn u't ■; fo yjwaejt* to fp« #m.(% o;. fps a«cou»j bt'i.p ?'»
f.-«i ;Q 40 ';..AS ity-f ■; woo? a pwucs * p«f

UjqaJ-wfioa n;. f-'<! tfej-e-imsiif s/4 o us off* g* co*siwuf»

IjtrHSiSuH ! w uq tpo bitufr o;, pp* btn-t' l.oi- >ruq ju cc

shall not "be required to sign any papers . or take any ac-
to

t.ion rendering it liable to expense or/Lnjury to its re¬
served rights in said patents except such possible injury
as iii incidental to litigation of the talking machine; righte
and except such expense as shall he satisfactorily guaran¬
teed to said party of the first part by said party of the
second part.

IV. That for a period not to exceed five years from

the date of this contract, the party of the third part
shall personally, without expense or undue inconvenience
to himself, give to the party of the second part his ad¬
vice and knowledge relating to the practical part of the
said invention so that the said party of the second part
shall be enabled to more fully perfect and introduce the
invention covered by said patents or any re-issuesof same
in a commercial manner.

V. If the party of the second part elects to exer¬
cise its said option, it will pay to the party of, the

first part, on or before Mdyll, 1904, the sum of Ten
Thousand Dollars ($10,000) in cash.

VI. If arid when the party of the second part elects

to exercise sa.id option, then upon the payment of isheVt

sum of Ten Thousand Dollars ($10,000) in cash hereinbefore
provided, the party of the first part v/ill execute and
deliver to the party of the second part a license agree¬
ment to the party of the second part conveying the rights
hereinbefore stated.

IH/TWITNESS TOTEKEO]? ' tKe’-'parties hereto

- 4 -

February 1,1904

Honorable Commissioner of Patents, .

Washington, D. c.

Sir:—

1 hand you herewith a license agreement dated January 22,
1904 between High-Am-O-Phone Company, National Phonograph Company
and Daniel Higham.

Kindly have this assignment recorded and return the same
to me, charging the cost thereof to my account.

Very respectfully,

FLD/kM .

(Enclosure) . .

High-Am-O-Phone Patents.

Mr. Daniel Higham, '

! Mnthrop, Mass.

Dear Sir:-

I have brought to Mr. Gilmore *e
agreement and he has executed it on behalf of
graph Company. Enclosed 1 beg to hand you t
original being retained for our own use. i
for $1000.00, the consideration for whi|h the
of which you will please acknowledge receipt.

Yours very truly,

IXD/fe.

( 3 Enclo sure s )

February 1,1904

i attention the option
the National Phono-
wo of the copies, the
also hand you check
option 1b granted, and

Higham pat ants ,

April 15,1904,

W.E. Gilmore, Esq.

c/o National Phonograph Co. ltd.,

25 Clerkinwell Road,

London, E.C. England.

Dear Mr. Gilmore:-

i In referenoe to the Higham patents, I

enclose an opinion which I have submitted today to Mr. Edison,
re oomm ending tjfiat nothing he done towards purchasing them.

The patonts atfe in my opinion invalid, and there is nothing
to prevent Mr. -Edison from getting up a device for accomplish¬
ing the same purpose without danger of legal complications.

Mr. Edison agrees with this view, and we will therefore, do
Ijothing towards exercising the option unless you oahle me
to the contrary. Tlui option ejg>ires on May first.

•/:./ Yours ve*y, truly,

ZLD/ASK. j '

•. ■ J

Ah \

Telegrams & Cables : “ Randomly, London.”
Telephono No. 5050, HOLBORN.

Thomas A. mark

EUROPEAN HEADQUARTERS

Projecting NATIONAL PHONOGRAPH
!g"S= EDISON MANUFACTURING

Batteries.

Bates and E _ .. _ _ ^

Numbering Machines.

Automatic Hand

25 Clerkenwell Road,
London,

85th April,

Frank X.. Dyer, Esq.,

C/o Edison laboratory,

Orange, New Jersey.

GO.

Go.

Ltd.

Factories :

Orange N. J.,

U.S.A.

Paris.

Brussels.

Dear Ur. Dyer,

I am in reoeipt of your letter of the 15th, enclosing copy of
your Opinion, dated April 12th;to Mr. Edison, relative to the Higham
patents, and in a cable which I sent through our New York office
to-day I advised you that I approved dropping the purchase of these
patents. The report that you have made is very full and complete,
and as you know I have all along thought that in purchasing these
patents we were making a mistake as it was a grave question as to
whether the patents could be sustained as against others, and the
opinion that you have written fully confirms my views on the matter.

1 presume that you will have written Mr. Higham, or his representa¬
tive, that we do not care to purchase same.

Yours very truly, (

NATIONAL PHONOGEAPHAXMPANY, n

U.IE.G./Ci.D.

-President .

a, y Hr. \

I ' V I

\ V y / May 6, 1S04 ,

\ ! ^

W. E.1 Gilmore, Esq., j

national Phonograph Co., ltd., t

25., Clerkonwell Road , .3 . C j|bndon . fc

' V- ' . • \ ii

Dear Mr. Gilmores- '

, • : ' • :

Your favor of the 25th ult. has been received,

and I am glad that my views |"n-. the Higham matter jooinoide with your
own. . ; -

1 wrote Mr. Higham that we did not care to exercise
the option, as soon as your cablegram oj^aei to hand. '

You, will be glad to hear that' I have succeeded in
opening up the Columbia territory in Washington and Maryland. As.
soon as the Court .ordered Mauro to. go ahead with the cases he gave
up, and I eun sending orders' to-night to have the Buits discontinued.

■ j Yours very truly,

‘ i ■ ■ ■

!& \

‘T.. . ..

ELD/foil,

•‘K’w-f^ — - ...

vru1-

:iTHr

M^rrU^k .

Legal Department Records
Phonograph - Correspondence

200-Thread Record

This folder contains correspondence and other documents relating to
Edison's efforts to obtain American and foreign patents for his 200-thread
record, which he manufactured as the "Amberol” record. The selected
documents cover the period 1908-1910. Among the correspondents are
Edison, Frank L. Dyer and Dyer Smith of the Legal Department, inventor
Ademor N. Petit, and British patent agents Marks & Clerk. Included are
affidavits by Edison and Smith regarding the development of the longer-
playing record, as well as correspondence concerning claims by the Premier
Manufacturing Co., Ltd., of Great Britain to have made similar records.

Approximately 10 percent of the documents have been selected. The
items not selected include printed material, detectives' reports,
correspondence, and other documents collected for a proposed suit against
the Premier Manufacturing Co.

f -z-£7 9

July 31,1908.

Hr. Dyer Smith: -

Here 1b a memorandum with Mr, Edison's note
thereon in reference to the foreign patents on the new 200-thread
record. These applications are of the highest importance and
every effort must he made to obtain adequate claims.

pld/aek.

[ENCLOSURE]

: ' ■ f

Mr. Edison:

In reference to foreign patents on the new 200-thread
record, I find that applications were filed on December 31, 190?.,
in England, Germany, France, Belgium, Austria and Hungary, so
far the French and Belgian patents have been granted. The
German and Austrian applications have been rejeEteid and I expect
that there will be difficulty in getting the patents, because in .
these countries the patent offices are Btriotly technical. The
Hungarian application has not yet been reached for action, but: I do
not expect trouble. The British application has been rejected,
but I think the patent will eventually be granted.

fld/iw F. E. D.

^1W

Mr. Dyer Smith: 12/6/09.

In reference to the application on 200-thread, machine, Mr. "Edison
told me to-day that when he first experimented with the invention
he made the recorder one-half the diameter of the 100-thread recorder
and that it was not until he had laid his plan out on a scale
one thousand times enlarged that 'he ascertained why it was that
the records were so faint. I think it would add a great deal to
the application if you filed an affidavit of Mr. T.dison detailing
his experiences along with the other affidavits . We want to push,
this case through as soon as possible. ^ c '

FLD/lW F. I. D. ".

Ur G'--'-"-

Masers. Marks & Clerk,

57 & 58 Lincoln’s Inn Pields,

London, W. C., England.

Dear Sirs:

We have an application for patent in the United
States Patent Office on Mr. Edison’s 200 thread record as an
article of manufacture. The application stands under final
rejection, hut the Examiner has stated that he will reconsider
his action if we oan produce certain affidavits which would
tend to indioate invention by allowing that the invention had
been vainly sought hy Mr. Edison and other inventors for a
long time, prior devices all being unsuccessful because the
principle on which our present successful 200 thread record is
made was not understood. I would like to have you, if possib¬
le, secure an affidavit as to the efforts of the Premier Manu¬
facturing Company, Limited, of The Point, Wandsworth, London,
S.W., to put out a four or five minute cylinder record.

As you doubtless remember, our Standard 100 thread
record is cut with a olroular groove by a recorder having a

MO #2

diameter of .04 of an inoh. To cut 200 threads to the inch,
the obvious thing seemed to he to use a recorder of one-half
the diameter of the former one, that is to say, .02 of an
inch. This was Mr. Edison’s idea for a good many years in
experiments which he conducted from time to time, hut the
resulting records were always too faint to he practical except
when reproduced through hearing tubes. Howover, he finally
discovered that the 200 thread record should he cut with a
recorder having a diameter not one-half, hut one-quarter that
of the reoordor for the 100 thread record, thiB resulting in
the formation of a record groove having the same depth as the
100 thread record groove, hut having a ratio between the width
and depth of the out only one-half of that in the case of the
100 thread record. That is to say, in the case of the 100
thread record the maximum width of the groove is about sixteen
times its maximum depth, while in the case of the 200 thread
record the maximum width is only about eight times its maximum
depth, the cut being approximately oiroular in each oase.
Accordingly, we have claimed in the United States application
substantially -a duplicate sound record made of a hard tough
material whose reoord groove is substantially oiroular in oross
seotion, has approximately 200 threads per inoh, and ifi of a
depth which is greater than one-tenth of its width, or whioh is
of a depth approximately one-eighth of ite width.

In talking to Mr. Edison a number of months ago, he
stated that he understood the Premier Company had put out a
four or five minute Clarion cylinder record, which ho thought
had been formed on the idea of using a recorder only half the
diameter of the 100 thread recorder instead of uBlng one which
was one-quarter the diameter as in our oase, and that because
of the laok of comprehension of this principle, the resulting
reoord waB so poor and faint that it waB unsuccessful and had
to be taken off the market. Of course, if I oan submit on
affidavit showing these faots in connection with an affidavit
showing Mr* Edison's unsuccessful experiments, they will be
very useful.

I have a circular of the Premier Company dated April,
19°9j advertising the Ebonoid five minute cylindrical record,
and I see from the Trades Journal that they are still advertis¬
ing this record. Therefore, I do not know whether they ever
took the record off the market as Mr. Edison seemed to think,
or not. Also, I have one of their records here, which I have
played, and: whioh seems to be quite good and loud. I am now
having it examined to find the ratio between the width and
depth of its groove. In view of these facts, I do not know
whether Hr. Edison was mistaken as to their reoord or not. Of
course, it may be that they first put on the market a poor reo-

H&C #4

ord made as described "by Hr. Edison and had to take it off,
and then found the correct principle and put a reoord made in
accordance with it on the market. I wish you would have an
investigation made as to those matters, and if you are able to
find anything whloh will bo of help to us, have an affidavit
made and sent to us. I suppose some of the men at the Nation¬
al Phonograph Company, Limited, can help you. Of course, wo
are very anxious to obtain a patent on this invention, if
possible, in viov; of the fact that some of our competitors
have Just put a four minute record on the market in this coun¬
try and are reaping the benefit of our extensive advertising
of our Amborol record.

Hoping- to hear from you soon, I am

Yours very truly,

LS/JS

Mr. Smith: -

I Jiave examined carefully under the niicro3cope the
Ehonoid record made hy the Premeir Manufacturing Co, and as far ua
I can see their recording stylus is as email as our own, in fact,
it looks to me as if it Y/as smaller.

W. H. Miller.

12-9-09.

Messrs. Marks & Clerk,

57 & 58 Lincoln's Inn fields,

London, W. C., England.

Gentlemen:

I have received your favor of February 10th re
five minute reoords. I note that you state that you have
discovered that the Premier Company made no 200 thread reoords
until early in 1909,' and that in view of thiB, you have dis¬
continued your inquiries. You also state that in the ciroular
issued by the Premier Company November 4, 1908, they stated in
the last paragraph but one that "As they had not at that time
produced any 200 thread records, they intended to do so and
intended to show these samples to their customers shortly
after the issuance of this ciroular. "

Apparently, I do not have this circular, and do not
quite understand the situation. You sent me with other cir¬
culars of the Premier Company, a typewritten page stated to be
a verbatim copy of the Premier Company's olrcular letter sent
to the trade November, 1908. , I do not know whether this was
the ciroular referred to by you as issued November 4, 1908, or

M&C #2

not. In this copy, however, it is stated "We are sending
under separate cover a test record of the new 200 thread
cylinder record", and following are instructions aB to the
manner toy which the toest results can toe ototalned from the test
record in connection with the sapphire point, which they state
they are sending along with the record. Am I to understand
that you have concluded that although the Premier Company
state that they are sending these test recordB under separate
cover, that they never did actually send out the Bame?

I would toe glad to have you send me the original of
the oircular from which I quoted, and also an original of the
oircular of November 4, 1908, if that 1b different from the
above.

The situation is as follows: - The Primary Examiner
of the United States Patent Office finally rej eoted" the^claims '
of Mr. Edison's application upon the 200 thread record as an
article of manufacture, upon the ground of non- invent ion. He
has stated to me personally, however, that he wiiu^d reopen the
case and give us a rehearing if I produced affidavits showing
that Mr. Edison and other inventors and manufacturers had
endeavored unBuooeosfully during a considerable period to
obtain a commercial four-minute record, and that they had not
been successful because they had not realized the relation
between depth and width of the record groove necessary to obr

tain the proper volume of sound. In reproducing from such a
record. I have such an affidavit signed by Mr. Edison as to
his unsuccessful efforts, and would like an affidavit as to
the Premier Company's efforts. The Premier Company confesses
in their circular of February, 1909 that up to that time they
had experienced various drawbacks and difficulties in the
making of such a record. They stated that one of the diffi¬
culties had been the making of a record of this character having
sufficient volume. Of oourBe, the inference from thlB is that
they had experienced the same difficulties as Mr. Edison and
had not realized that to obtain a 200 thread record made with
a circular recorder, the latter should be approximately one-
quarter the diameter of the recorder used in making the 100
thread record, instead of one-half the diameter of the latter,
as it always Beemed to Mr. Edison it should be during the
period of his unsuccessful efforts to product the 200 thread
record. This inference, however, is not definite proof of
this fact. Our' case would be much stronger if we oould pro¬
duce one of the test reoords referred to by the Premier Com¬
pany in their ciroular of November, 190g, a oopy of whioh you
sent me and from whioh I have quoted, this test reoord being
one in whioh the groove was cut by a recorder approximately
.02 inch in diameter, if that is the oase* If we oannot

M&C #4

obtain suoh a record, the proof would be equally definite if
we could obtain an affidavit from some one familiar .with the
efforts of the Premier Company during their experimental stage
previous to January or February, 1909, stating that the diffi¬
culties which they were not enabled to overcome for some time
were as indicated above. Is it not poBBible for you to ob¬
tain information from some one who worked for the Premier Com¬
pany at that time and was familiar with their endeavors? The
claims of our application are limited to a record, the groove
of which is approximately circular or elliptical in crosB
section, is of a pitch materially finer than 100 threadB per
inoh or specifically, approximately 200 threads per inch, the
maximum depth of the groove being greater than one-tenth of
its width or specifically, approximately one-eighth of ltB
width, the maximum depth of the groove also being approximately
.001 inch or less. The actual maximum depth of the groove in
our 200 thread record is about .OOO65, and with suoh a depth
the proportions have to be about as Btated when the recording
stylus has a diameter of about .01 inoh. Our recording stylus
for the 100 thread reoord has a diameter of about .04 inoh,
or four times the diameter of the recorder for the 200 thread
record, and records made by this recorder having the same
depth aB the 200 thread records have a width twice as great,
so that with them the depth of the groove is less than one-

u&c #5

tenth of ito width, or approximately one-Bixteenth of the
width. If you can obtain any information along the lines
indicated, it will he of great help. If you are. not able
to get such information, kindly have prepared an affidavit
exeouted by one of yourselves, setting forth the best facts
in your possession which will bear upon the matter.

Yours very truly,

■DS/TS

IN THE UNITED STATES PATENT OFFICE.

THOMAS A. EDISON
SOUND RECORDS
Piled January 3, 1907
Serial No. 350,646

HONORABLE COMMISSIONER OP PATENTS,

SIR:

In oonneotlon with

the above entitled application, applicant's attorney on
Mar oh 23rd, 1910, sent the following telegram to Examiner
J. T. Newton, Division 23, U. S. Patent Office: "Will
you grant rehearing Edison application 350,646 on Friday?
Have new evidence invention. If not Friday, some date
before April 2. Wire reply oolleot. Prank D. Dyer."

The same day the following reply was reooived:

"Prank L. Dyer,

Edison laboratory,

Orange, N. J.

Will grant rehearing on EaiBon
application -Friday"

J. T. Newton. "

Aooordingly, on Friday, March 25, applicant’s attorney
interviewed Examiner Newton and had the desired rehearing
in connection with the rejection of the claims of the said
application. Applicant's attorney submitted to the Ex¬
aminer the following papers, which were accepted and ad¬
mitted to the file: 1st: an amendment of various formal
matters intended to olear up various olerloal errors and
to add to the clearness of the specification; 2nd: affi¬
davits of Thomas A. Edison, Charles: N. Wurth and Dyer
Smith; 3rd: various: papers filed as exhibits in connec¬
tion with the affidavit of Dyer Smith.

. ■ ii. ■ ;

)

: Room Ho. 379

)

The affidavits ana exhibits v/ere intended to show
invention ana patentability of the subject matter of the
applioation from the fact that, first, the invention was
of great oommeroial importance, and secondly, that it
had been unsuo cess fully sought by Mr. Edison ana other in¬
ventors through a long term of years during muoh of whioh
time most of the patents oitea by the Examiner aB refer¬
ences v/ere known. The affidavits Bhow the difficulties
whioh had to be overcome, and they show that apparently
the same difficulties ware met by an English Company
faoing the same problem ana wore not overcome by this
oompany for a term of several months even with the aia of
the sound reoord then manufactured by Mr. Edison and em¬
bodying a reduction to practice of the invention claimed
in this applioation. The affidavits also show that no
other inventors or manufacturers had apparently realised
the invention before Mr. Edison.

In connection with this data various authorities
were oitod by applicant's attorney to the effeot that in
judging of invention in case of doubt regard may properly
be had to the efforts of other inventors in the same
field particularly where there are not a few both before
and since, as.'.weli as to the difficulties to be overoome
and the success of the device, where in the number and
quality of the artioles produced it has been marked. Ther< E
are many such decisions and the principle is well recog¬
nized. Among them may be noted Bovelty Class Manufactur¬
ing Oompany, vs. Brookfield, 170 I*. 946, 953; Ex parte
Eastwood, 144 0. G. 119; Mitohell, et al, 15 Gout, 25-53
March 19, 03; Exparte Thomson, 120 0. G. , 2756, Also
the recent case of General Electric Company vs; Hill-
Wrlght Eleotrio Oompany, 174 S’. R. 996.

As well stated in the laBt citation " the fact
that the invention is simple and that at the present time
it seems that it might have been obvious to the workers
in this art, does not militate against its validity. Many
of the most useful inventions depend upon equally simple
olianges. She important question is - what does the inven¬
tion do?"

It is thought that it has been shown that this
invention has done what has never been done before, name¬
ly: made a oommeroially practical 200-thread Bound reoord
the manufacture of whioh has now beoome a tremendous in¬
dustry, hundreds of thousands of these records known as
the "Amberol" records being manufactured and sold by the
national Phonograph Company alone every month.

The discussion of the references and the general
questions of patentability conneoted with this invention
appear of reoord in applicant's various amendments, and
were further gone over on the rehearing before the Ex¬
aminer and need not now be rehearsed. It need only be
noted that in a sound record having 200 -threads to the
inch, the artiole formed is so exceedingly mioroBoqpio as
to the details of the reoord undulations that it is always
extremely difficult to discover and fully appreciate the
exaot difficulties whioh prevent suooess , and it was there
fore possible for applicant and his assistants to labor
on the question involved for many years without realizing
the conditions whioh finally being realized resulted in
the remedy involved in the present invention.

Respectfully submitted.

THOMAS A. EDI SOU
by

[ATTACHMENT]

. IN THE TOUTED STATES PATENT OPEICE

Thomas A. Edison , :

SOUND RECORD :

Piled January 3, W : Roocl Ro* 579-

Serial No. 550,646 :

State of New Jersey )
County of Essex )

■ THOMAS A. EDISON, being duly

sworn, deposes and says as follows: I am of mature Age,

reside at Llewellyn Part, Orange, Essex County, New
Jersey, and am the same' Thomas A. Edison who filed appli¬
cation Serial No. 350,646 on January 3» 1907* The Bald
application describes and claims a sound record as a new
article of manufacture, this record being formed of a
hard tough material having a record groove which is sub¬
stantially oircular in cross section, and having approxi¬
mately 200 threads per inch, the maximum depth of ■ the
groove being greater than one tenth of ltB width, or .
specifically, about one eighth of its width when the
record has 200 threads per inch and the groove has a
maximum depth of approximately .0006 of an inch. As I
have stated in my application, a sound record such aB
that just described is formed by the use of a recording

(1)

[ATTACHMENT]

stylus having a diameter only about one fourth the diameter
of the styluB which is regularly used for mating the 100
thread record. As I state in my application, this re¬
sults in a record which may be reproduced with the requis¬
ite loudness and with great clearness. The Invention
which my application describes and claimB was the success¬
ful culmination of a great many years of experimenting on
the part of myself and my assistants.

My attempts to make a successful 200 thread
record date back to the early nineties. One thousand
phonographs intended to reproduce from records having
200 threads to the inch were made under my direction and
shipped to England for the Bdison-Bell Company between
May and August, l8?5. The records whioh these phono¬
graphs played were cut by a stylus having a outting edge
.020 of an inch in diameter. That is to Bay, the stylus
was just about half the size of the recording stylus used
in making 100 thread records, since it seemed obvious that
a record having 200 threadB per inch should be out by a
stylus one half the size of that used in making recordB
having 100 threads per inch. The records so made and
reproduced on these machines sent to England were consider¬
ably weaker than the 100 thread records, so that they
oould only be heard by the use of hearing tubes. I
now attribute the weakness of the sound reproduced from
these records chiefly to the fact that I did not then
realize that the recording stylus should be one quarter
instead of one half the diameter of the recording
stylus used on the 100 thread record. Five hundred
more of these machines for playing 200 thread reoords
were Bhipped to England for the Edison-Bell Company

(2)

[ATTACHMENT]

from January, 1895 to May, 1896. The records for
this lot of machines were made hy the use of the same
sized stylus aB the first lot of these records, and were
not loud enough to he heard except hy the use of hearing
tubes. This attempt to make a 200 thread record was
considered unsuccessful and no other machines of thiB
type were made commercially.

A number of my assistants experimented at inter¬
vals for a great many years under my direction in the
endeavor to make a commercially successful 200 thread
sound record, and particularly one which would he suffic¬
iently loud to reproduce with a horn. In none of the
experiments, however, was it realized that the cutting
stylus should he reduced in the proportion deporihed in
my application. Charles N. Wurth, one of my aBBistants,
made such experiments at intervals for about ten years
up until possibly 1901. All of the 200 thread records
made hy him were formed hy a stylus of approximately .020
to - .025 of an inch in diameter. He also made under my
direction some 400 thread records. The first of these
was made in July, 1895 with a stylus having a diameter
of .010 inch. Other 400 thread records were made hy
Mr. Wurth with a stylus having a diameter of .009 or .008
of an inch.

I'inally, after all theBe unsuccessful experi¬
ments, I hit upon the correct way to make a 200 thread. Rec¬
ord, Mr. Walter H. Miller helping me. ThiB was, I think,
in 1905 or 1906. Ab the result of experimenting and the
making of wooden models and charts upon an enlarged
scale showing the sound record as made under different

(5)

[ATTACHMENT]

conditions, I determined that the 200 thread record
should he cut with a stylus of .010 of an inch in diameter
or thereabout, aB described in my application. This in¬
vention resulted in the manufacture of the well known
Amborol record having 200 threads per inch by the national
Phonograph Company. A very large business is done in
the manufacture and sale of these records.

Sworn to and subscribed before mo
this f 0 ■- day of January, 1910.

[ATTACHMENT]

IH TICS UNITED STATES PATENT OFFICE

Thomas A. Edison
SOUND RECORD
Filed January 5i 1907
Serial Ho. 550,646

State of New Jersey )

: as.

County of Essex )

DYER SMITH, being duly sworn,
deposes and says as follows:

I am of mature age, reside at Montclair, Now
Jersey, and am a Batchelor of Laws and patont attorney
in the Legal Department of Thomas A. Edison. Some time
in 1909, I think in the early summer, Mr. EdiBon stated to
mo that he considered one of the proof s of invention . dn
his 200 thread sound record upon which application Serial
No. 550,646 v/as filed, to he the faot that a practicable
200 thread sound record had been diesred for many years,
but had never been achieved prior to his invention, because
of the failure of all the manufacturers to realize that
the cutting stylus for the 200 thread record Bhould be
not one-half the diameter of that used for making the 100

(1)

[ATTACHMENT]

thread, rooord, hut much smaller, and In fact about one -
quarter the diameter of the 100 thread rooord recorder.

He also stated that be understood that the Premier Manu¬
facturing Company in England had made a 200 thread record
which was too v/eak in volume to be successful, beoause
they had not realized this important point of his inven¬
tion. In connection v/ith thiB matter, I havo aBoortained
the following facts:-

Apparently, the Premior Manufacturing company,
Ltd. endeavored in the fall of 1908 to manufacture a 200
thread record, but met with various difficulties and only
succeeded in making a practicable 200 thread record about
February, 1909. The record whioh they then made and
which they are still selling is called the Clarion record
and is of sufficient volume, being made, apparently, by
a recording stylus of about the same diameter aB that
whioh the National Phonograph Company ubgb for making the
200 thread record, that is to say, about .008 inch in
diameter. The Premier Company, however, did not learn
how to make a 200 thread record having sufficient volume
until many montho after the Edison 200 thread rooord
appeared in England.

I submit herewith the following papers which
were received by me January 18, 1910', having been for¬
warded to us by Thomas Graf, Managing Dlreotor of the
National Phonograph Company, Ltd. in London, England.

Plrnt: Copy of a circular which was sent to

the trade in November, 1908 by the Premier Manufacturing
Company.

(a)

[ATTACHMENT!

Second: Printed circular of the Premier Manu¬

facturing Company, dated February, 1909.

Third: An original list of the Premier Company

which is headed “First List of Ebonoid Five Minute Rec¬
ords", isoued in April, 1909.

Fourth: First Retail Dealers Agreement of the

Premier Company dated April , 1909, containing five
minute records and attachments.

Fifth: Page taken from “Phono Trader and

Recorder" of January, 1909, in whioh the Premier Manu¬
facturing Company state that they are now manufacturing
their first aamples of the new 200 thread Clarion record.

Sixth: Page taken from the "Phono Trader and

Reo order" of February, 1909, in whioh they state they
shall announce the new list of the five minute reoords
this month.

Seventh: Page token from the "Phono Trader

and Recorder" of April, 1909, containing an advertisement
of the Premier Manufacturing Company giving their firBt
list of Ebonoid five minute rooordB.

On examining those papers, it will be seen that
in the first the ciroular sent to the trade in November,
1908, whioh waB shortly after the Edison 200 thread rec¬
ords appeared in England, they Btate that they are sending
under separate cover a test reoord of the new 200 thread
cylinder record, together with a sapphire point which may
be fitted in the Model C reproducer (which iB the regular
reproducer used by the National Phonograph Company to
play Edison 100 thread records)/. They request their

(3)

[ATTACHMENT]

dealers to toot this record and to let thorn have their
views as to the quality of the same.

1 have not an yet succeeded in obtaining one of
those teBt reoords, but hope to do bo. By referring to
paper Ho. 2, however, it appears that the teat rooord, if
any ouch was sent out, and all 200 thread reoordB made by
them up to that time, had been unBuooesaful. The circu¬
lar states that the Premier Company have boon making
certain experiments in their laboratories with a view to
overcoming the drawbacks and the difficulties which up
until that time had appeared in the making and using of
records with a finer pitched thread than that of the
usual 2-l/2 minute record. They state the difficulties
which had to bo overcome before a five minute record.

(that is, a 200 thread reoord) could become at all a
practicable thing were - 1. Material. 2. Maohines and
Attachments. 3. Volume.

Referring to Pago 3 of the circular undor the
heading "Volume”, they state "Thl3 has boon one of the
stumbling blooks tliat has stood in the way of manu¬
facturers introducing a record with a finer pitched thread
with any degree of certainty as to the rooord ever finding
a popular and ready demand." They then state that they
have produced the now "Ebonoid" five minute reoord which
has a sufficient volume. It also 1b to be noted in
this circular, page 2, under the heading "Machines and
Attachments" that the Premier Company adopted a special
sapphire constructed to fit into the ordinary Model C
roproducer. This is still the same Edison reproducer

(4)

[ATTACHMENT]

with v/hioh the first circular of November, 1908 stated
the 200 thread record was to be played.

I should here state that I have seen one of the
so-oallod Ebonoid five minute records and the same has
200 threads or approximately 200 threads per inch. I
made a reproduction from the same upon an Edison phono¬
graph in whioh the feed was one-two-hundrodths of an
inoh for each revolution of the mandrel.

I am familiar with the teolinlque of the
acoustio art as praotioed in the manufacture of cylindri¬
cal sound reoords, and from the faots indicated by the
papers referred to and attached hereto, and particularly
in oonneotion with papers 1 and 2, I am strongly of the
opinion that the record made by the Premier Company
in November, 1908 wbb deficient' in volume because of the
fact that the Premier Company did not realise that the
cutting stylus must be considerably reduood in volume
below a diameter of say .020 inoh in order to get a
sufficiently deep groove, and that this difficulty was
not overcome until January, 1909 or thereabouts, during
whioh interval their experimenters had sufficient time
and opportunity to thoroughly study the successful Edison
200 thread record. In Pobruary, 1909, the Premier Com¬
pany referred to their difficulties in produoing a 200
thread record and state that one of the oliief of thebe
has been the laok of sufficient volume. There are only
two factors whioh contribute to the volume or loudness of
reproduction from a sound record, first, the depth of the
reoord groove, and second, the amount of amplification
between the Btylus and the diaphragm. That is to Bay,

(5)

[ATTACHMENT]

the loudness may he increased hy making a deeper record
groove or hy increasing the ratio of leverage in the
BtyluB lover. I am considering, of course, only the
vertically undulating typo of record. The Premier Com¬
pany uood the Bama leverage in their unsuccessful experi¬
ments of November, 1908, and in their successful opera¬
tions beginning in February, 1909, sinoe the circulars of
November, 1908 and of February, 190? both Btate that the
ordinary Edison Model C reproducer is to be used, fitted,
however, with a stylus sufficiently small to track the
record groove. Since the leverage was the same in both
oases, the inoroase in volume must have come from cutting
a deeper record groove. Since the width of the groove
is limited by the number of threads per inch, this result
is only accomplished by considerably decreasing the
diameter of the cutting stylus, the Bound record groove
in the Premier reoord being approximately circular in
cross seotion. The factor of material has nothing to
do with the loudness of the record, the leverage being
the same, but only with the life of the record under the
inoroased wear of the stylus in the more narrow reoord
groove. Of course, the loudness might alBO be increased
by using a largor amplifying horn, but the horn 1b evi¬
dently the same in both oaseB with the Premier Company,
since nothing 1b said about it and their record is stated
as being adapted to be reproduced upon any standard phono¬
graph.

If I succeed in obtaining one of the test rec¬
ords sent out by the Premior Company in November, 1908,

[ATTACHMENT]

or if I succeed in obtaining an affidavit from any ono
having personal knowledge of tho diffioultioB and experi¬
ments of tlio Premier Company referred to, I will at once
file the Game in this case. However, it seems obvious
that conditions mpst have been as indicated above for the
reasons stated.

I will also Btate that to the best of my know¬
ledge and belief no successful 200 thread cylinder Bound
record or one embodying Mr. Edison's invention was ever
made before his said invention or placed upon the
market before the Edison 200 thread record known as
tho Amberol reoord. If any suoh recordB had boon made
and manufactured, knowledge of the same would liave oomo
to myself and the other attorneys in Mr. Edison's Legal
Department.

Sworn to and subscribed before me
thiB day of March, 1J?10.

4^'. ,

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-I-

LEGAL DEPARTMENT RECORDS
PHONOGRAPH - INTERFERENCE PROCEEDINGS

These interferences involve patent applications filed by Edison,
Edward L. Aiken, Wilburn N. Dennison, Thomas H. Macdonald, Alexander N.
Pierman, Peter Weber, and others. Documents have been selected from the
records of five interferences involving the duplication and amplification of
records, a recording cutter, and a sound box. The selected material consists
of patent office filings, correspondence, briefs, and testimony that discuss
Edison's role in the invention process or the interference proceedings. Two
closely related proceedings have been grouped in the same folder.

The interference records not selected involve concealed horns,
reproducers, return devices, speed regulators, and a variety of other
improvements.

Macdonald v. Edison (No. 20,775)

This folder contains material pertaining to a Patent Office proceeding involving Edison's
U.S. Patent 648,935 on apparatus for duplicating phonograph records and a competing
application filed by Thomas H. Macdonald on June 2, 1900. After being denied a patent by the
examiner of interferences, Macdonald pursued the matter through three levels of appeal.

Edison v. Petit v. Capps (No. 22,202)

Edison v. Jones (No. 22,203)

Edison v. Smith (No. 25,460)

Edison v. Macdonald (No. 25,677)

Legal Department Records
Phonograph - Interference Proceedings

Macdonald v. Edison (No. 20,775)

This folder contains material pertaining to a Patent Office proceeding
involving Edison's U.S. Patent 648,935 on apparatus for duplicating
phonograph records and a competing application filed by Thomas H.
Macdonald on June 2, 1900. After being denied a patent by the examiner of
interferences, Macdonald pursued the matter through three levels of appeal.
The one selected item is Edison's brief in the hearing before the
examiners-in-chief.

United States Patent Office.

THOMAS H.- MACDONALD

Before the Honorable Bxaniiners-m-Chief.

BRIEF FOR EDISON.

DYER, EDMONDS & DYER,

Attorneys of Record.

FRANK L. DYER,' ' .

' Of Counsel.

Thomas H. Macdonald

Thomas A. Edison.

BRIEF FOR EDISON.

November, 1897, disclosure to otUers at that
le making of working drawings in June, 1898,
etweeu Au¬

gust 1, 1898, and Ootober 1, 1898, and tbe successful
operation of thut apparatus on tbe latter date.

The Invention in Controversy] and the Cir¬
cumstances leading to Its Production.

Before disoussing the relative merits of tlie cases
presented by the two contestants, it should first be
explained what the invention is that the parties are
here contending for, in doing whioh we shall try to
give the philosophical reason for the making of the
invention by Edison.

A phonograph record, as is well known, is formed
in a cylindrical waxlike blank by the cutting or goug-

phrngm may have vibrated. It is evi¬
dent that, if the record surface be moving
•very: slowly, they curved-edged recorder will be

.permitted to form a gouge: of but slight longitudinal
• extent; whereas, if the recording surface be moved at a
■relatively high velocity, a gouge formed, by tbe same
vibration will be proportionately elongated. On the
other hand, if the vibration is of excessive.rapidity (in¬
dicative of high pitch), the gouge .will be formed so
quickly as to be relatively, short, even though the speed
•of the recording surface be high.

. In order to reproduce from a phonographic record,
a reproducing ball is employed, which is connected to
•the diaphragm and which is supposed to accurately
itrnok the connected, gouges constituting the record.
These reproducer bnlls are ordinarily slightly less in
diameter thnn that of the curve of the cutting edge of
the recorder. Owinc to its snherieal form, it is ob-

able width of surface for the formation of the record
is extremely narrow. ' Modern phonographic recorders
are generally about .04 of an inch in diameter, so that •
obviously the record groove, even if of its maximum
width (.01 inch), will be very shallow. Any record
r gouge which is materially less than .01 of an inch,
therefore, cannot be tracked by the spherical repro¬
ducers, which in practice have a diameter of about
■ .036 of an inch.

When the phonograph was , originally invented, it
was designed largely as a 'substitute for stenography,
and hence the records .’as originally made were not

a comparatively slow surface speed of the blank, a
record made for . dictation purposes would, therefore,
be praoticnlly free of untraokable gouges or depres¬
sions of less length than width. Instead of the
•phonograph developing along the line indicated,
•the development proceeded to an enormous^ extent
in the field of entertainment, and most of the talk-
ing-maohine records sold during the past few years
have been musical in character. The original phono¬
graph, as designed ns an office amanuensis, made use
of listening tubes, but with the advent of musical
records it was found necessary to so increase their
volume as to permit reproduction by means of a horu.
It has, therefore, been the aim of the manufacturers to
make louder and louder rooords, the recording ma¬
chines being suitably modified to accommodate sounds
of greater volume. .

The making of very loud musical records presented,
•however, a greater difficulty than might be supposed.
In the first place, ■ a musical record, especially when
•composite, like that of n brass band or orchestra, is ex-
- tremoly complicated, the number Of gouges or depres¬
sions as compared to un ordinary talking record being
enormously increased and hence relatively shorter, ns
•they must be received on a recording surface of the nor¬
mal length. In the second place, in order that such musi¬
cal records may be very loud, the original sounds are of
.correspondingly greater volume, so that the vibrations
of the recording diaphragm will be'similarly i.'n,-»nsf>d,
:nnd, 'therefore, the depth and width of the gouges or
depressions constituting the reoord .will be likewise
• augmented. Edison found, for example, that with an
•ordinary phonographic musical record sufficiently loud
to be heard through a horn most of the gouges or de- •
pressions wore of greater width' and length. It fol¬
lowed that such records could not be accurately traoked
,by a reproducing ball, which would be permitted .
Only, to glance over the crests of the .waves, and
Jience which would not .communicate to , the

reproducing diaphragm the full nmplitiide of the
original vibrations. Having made this observation,
and having found that' the public demand had re¬
sulted in the production of a record which could not
bo tracked by the ordinary, reproducing device, Edison
•turned his attention to the making of a reproducer’
•which could track such a record. Siicli a reproducer ■
•was invented and is described in Edison’s. Patent No.
652,467, dated- June 20, 1000, the application for
whioh was filed Septomber 21, 1899, about n month
prior to the application for the patent in interference,
both applications pending contemporaneously. The
reproducer patent in question, owing to a mistake on
tlie part of the Patent Office, was reissued September
25, 1900, No. 11,857. In this patent Edison points
out the difficulties which we have explained, states
that he effects a perfect tracking of the record- “ by
the employment of n reproducer of such n form that
•it will enter all portions of the record ' us nt present
made at the usual surface speeds,” ’ und ! claims
broadly, in combination with nu ordiuary loud record
phonogram,

■ " a reproducing device having a curved bearing
surfuce engaging the bottom and side walls of
the record and of a form adapted to enter and
accurately truck all of such representative' waves.’’

Suck was the situation in the development along
. the special line with whioh we are here dealing when
the mutter of the invention in controversy was pre¬
sented. , ■••;■;

It is well known that practically all of the
phonographic ■ records now sold ’ are duplicates
made by a mechanical duplicating process, wherein a.

reproducer engages a suitable master and commuuicates

'its vibrations to ah . ordinary recorder in' engagement
with a rotating blank. ' In this way a single master
•onn' reproduce a large number of satisfactory dupli¬
cates before it becomes useless, while the first dupli- :

“ uuln" currespouoiug to Mint ol the master.
In other words, the duplicate record will be less in
deptli than the original record, being so shallow, in
fact, as not to contain any gouges, of less length than
width,. Such duplicate records can, therefore, be
accurately traoked by a reproducer ball, and the same
Bffect will be obtained from them as would be scoured
from an original record of greater depth, bnt which
cannot be fully tracked by the reproducer.

So far as regards the ordinary spherical reproducing
devices, the usual mechanical duplicating process was
all that could be desired, ns if resnlft.fi in tw „

bo correspondingly increased, so that ' the gouges or
depressions of the record will be spread out and lieuce
will be always of greater length than width, and, there¬
fore, capable of being accurately traoked by the re¬
producer ball of the duplicating apparatus. The
duplicating reproducer ball, in consequence, vibrates
to its full amplitude nnd correspondingly actuates the
recorder, which outs a duplicate record of the full
depth, which duplicate can only be accurately tracked
by a reproducer of the type for which Edison has been
granted a broad patent. For any other kind of repro-

there can be no doubt but that the invention for which
the parties are here contending is 6ne wherein the
master record whioli is earned on the large mandrel
shall be "free of waves or depressions whioh are of
loss length than width.” '

Maodonald’s Case.

* As against Macdonald, we shall argue :

Firat, that the specific invention in controversy was
Jever actually reduced to practice by him.

Second, that the apparatus on which ho bases his
ilaim for actual reduction to practice was an abandoned
ixperimont.

Third, that he abandoned the invention.

,i . .:dred. On this machine I: made a great, many,
tations of varying loudness, and listened to
reproductions. My- conclusion from this serif
-experiments was that there was 'an increas
■ quality and loudness in the record very notice
up tb a surface speed' of abont eightueu hum
inches per minute, or somewhere in that neigh
hood. Beyond that point I did riot think tin
crease so marltod. I became convinced that the
son of the increase in volume and quality was o\
to the fnot that the recorder was not interfi
with in its vibrations by the material behind
heel of the cutter, and also because the reprodi
point was able to follow the contour of the waves
■ graved on the cylinder much more- accurately t
. • when they were crowded closely together. * 1

: : X then determined to build a recording mao]
which Would make a record upon the oyliuder
inches in diameter, and also a duplicating mncl
which would carry this five-inch cylinder
duplicate the record upon an ordinary blm
(Macdonald Becord, p. 12, Q. 80).

, Macdonald testifies that the duplicating inac]
referred to was completed about the . last of Aug
1898 (Macdonald Becord. n. 8. O. 81. from sbnfr

Macdonald, in fact, was, directly asked by bis, counsel
(Q. 24a):

, “Is the Grand record a ''record of suffi

called for by the counts of tbe issue ? "
He replied :

*iut. Tbe majority, of the waves on all
Grand records are o much less length than width.
Tins, of course, is also true of tbe small record.”

Macdonald’s attention being called to tbe statement
in bis application that with tbe master record the
“ length of the waves or depressions must not be
* * * less tbau their width." lin wno nalro/l if

examination Macdonald attempts to! bring 'the original

apparatus within tbe terms of the issue, without di¬
rectly oontrndioting his positive previous '.'testimony.

no doubt that it will be argued by Macdonald that
since Edison refers in bis patent to a master '• pref
erably from five to six inches ” in diameter, both in
ventious must be regarded ns patentably identical
We reply to such au argument by calling the Ex'
nminer's attention to the fact, first, that Mncdonali
•lias specifically testified to the effect that the origins
master used' by him was not of the oliaraoter covered
by the issue, and, second, that u master live inches it
diameter need not have a record free from waves or do,

extensively, raises the presumption that the use
was merely experimental, and that what was doue
amounted to no more than an abandoned experi-

In Putnam vs. Hollander (0. D., 1881, 246) a single
bottle stopper embodying the invention in controversy
had been actually used and its successful operation
fully proved. Yet the Court held that, as this single
device had not been subjected to the test of actual
transportation, its use amounted only to an abandoned
experiment.

In Washburn cfi Moen Mfg. Co. vs. Beal-Em-AU
Barbed Wire Co. (6. D„ 1892, 290) the Supreme Court
held that, since the device was made and afterwards
lost, it must be regarded as an abandoned experiment,
Eor, if the maker had considered it of any practical
value, he would have applied for a patent on it, us
lie applied for patents on other devices subsequently.

, This is the situation here. Macdonald did not
ipply for his patent; as we have said, until his counsel
iiad read the Edison claims in the “ Gazette.” while.:

ne.iit, is Glidden vs. Busell (01 D,; 1894, '4S)i In' that
ciise Glidden reiiod entirely on a mudhino constructed by
him in 1886. This machine was sufficiently’ operative to
trim and rand a few heels, and was, in fact, so used.
It was, however, dismantled, and experiments with
other forms of driving mechanism were carried on.
It was only after the interference was declared that
the original machine was reassembled, aiid the
attempt was made to support a claim of actual
reduction to practice thereon. After 'reviewing all
the circumstances of the cuse, the Commissioner held;
however, that, Gliddon’s early’ work must be regarded
ns nil abandoned experiment.

The similarity between that case and the present one
is striking. Both Glidden and Macdonald constructed
an original machine. G
in a measure. Mncdonal
but his testimony is v
and Macdonald, after mi
commenced experiments
mutely achieved success,

III.

IVe have pointed out the line of the development of
the invention by Edison, and have shown that the
.present apparatus wus.the logical outcome of the in¬
vention by him of a reproducer which for the first time
in the art was . capable of accurately tracking all
portions of a. phonograph record of standard diameter
and sufficiently loud to be heard through a horn.
Edison’s Patent in interference dearly states the theory
upon whioh the present invention is based — i. e., the
utilization of a master having such an extended record
ns can bo tracked by a spherical reproducer, so that
the resulting duplicates will correspond, in depth and
width of the gouges constituting the record, with an
original record made on a blank of standard diameter.

■ Since Edison wus the first to make a reproducer whioh
can track a duplicate of the kind made by the present
apparatus, the question naturally arises : What was
Macdonald's purpose in making an invention for the
production of duplicates whioh could not be tracked
by any reproducer known to him at the time.? Mao-
donald s oxpluuutiou is not particularly convincing.
He says that ho wished to make a master taken nt
high surface speed, because by doing so a more perfect
record would bo formed. Thus, in nnswer to x-Q. 26
(Macdonald Becord, p. 22), ho says :

“ This high or increased speed carries the
mntoriai under or liohind the heel of the cutter
away, so that, in the downward movement, the
cutter is not intererod with by this material ; con¬
sequently, the cut results in a more ncourate

In liis application, filed December 5th, 1898, on the
so-called Graphophoue Grand, Macdonald makes the
statement :

“ The present invention involves the principle
which may be briefly stated as follows : The speed
imparted to the record tablet shoultl be such that
the crest of each undulation moves from under the
record and recording style so rapidly thnt the heel
of the latter nt no time makes contact with tiie
recording material ; and thnt the diaphragm is
free to give its full sweep. The invention, more-
fore, consists primarily in imparting to the tablet
during the recording operation . a surface speed
which will secure the result nbove stated. It has
been found thnt a surface speed of about forty-
four meters per minute will soouro the desired
operation.''

Macdonald still agrees with this statement (p. 29,
•x-Q. 46). Furthermore, Macdonald, in an affidavit
filed in the same application on the Graphophoue
Grand, referring to himself in the third person, said

“ that, from his intimate knowledge of the art, he
has no hesitation in assorting that, in making
records by and iu accordance with his said inven¬
tion described in his said. application, the record¬
ing surface travels at such a high speed as to
withdraw the crest of each undulation from under
the heel of the recording style before the same
has damped or checked the vibration of the style ;

. in other words, that the surface of the recording
tablet moves relative to the Btyle witli a high sur¬
face speed sufficient to prevout the heel of the
style from making coutuot witli the undulations ;
furthermore, deponent says that, from his knowl¬
edge of the art, he confidently asserts ns a reuson
why sound records out in wax, or waxlike material,
as the same wore produced prior to his said in-
' vontion, did not give reproduction sensibly equal
in volume and corresponding in character to the
\ : original sounds, is thnt . the surfuco of the

recording tablet moved under the recording
, style with a speed so slow that the heel of the
Btyle made contact with the undulations, thereby
damping vibrations of the stylo and diaphragm,
and necessarily causing the stylo to cut undula¬
tions not only of loss amplitude, but materially

differing in character from the original sound

* wuve."

• Asked (p. 81, x-Q. 47) if he still agreed with these
statements, he replied :

' “ I cannot identify this particular affidavit, but
will stute that I believe the substance of what is
stated is correct — that is, the heel of the cutter is
interfered with at slow speed, and this has the
. effect of producing a record of less volume than
where the speed is higher.”

Having reference to Macdonald's pretended theory,
that phonographic, records as heretofore made-on
blanks of standard diameter were imperfect because
the surface speed was not sufficiently high to prevent
heeling, he was asked (p. 94, x-Q. 29) :

“ Were you the first, so far es you know, to sug-
. gest this possible difficulty in recording sounds,
and to explaiu the way by which that difficulty
could be overcome ? ”

“ I believe that I was the first to suggest a
way by which this difficulty could be overcome. I
might say I believe myself to be tbe first to have
recognized this ns the difficulty in the way, and to
suggest the means of overcoming it in this typo of
machine ; that is, a'five-inch blank at a high sur-

Macdonald’s reference to the use of a master of ab¬
normally large diameter is obviously inconsequential,
since in his Graphophone Grand application of Decem¬
ber 6th, 1898, he says that a high surface speed is
alone necessary, and the Examiner, will find, upon
reading that. application, that Macdonald specifically
refors to the securing of a high surface speed by the
operation of a standard blank at an abnormally high

diameter ^ “ "'eU aS ^ ** "8®of 11 of large

. 1,ove referred to Macdonald’s pretended theory
in this case solely for the purpose of showing that that
theory is inconsistent with his present attitude— i. e„
that he conceived and reduced topractioe the invention
here in controversy, which is based upon Edison’s
discovery of the true difficulty. The invention in
controversy is described by both parties us de¬
pending solely upon the supposition that the
master must be of such a character as will permit
the record thereon to be accurately traoked by the re¬
producer ball. That is the theory which Macdonald
has adopted m his application, and is one in which he
hus taken bodily from the Edison Patent.

Macdonald’s theory in reference to the making of the'
record is outside of the ease and one which Edison
does not adopt. Anyone skilled in the art must know
that a recording, surface should be moved nt a suffi¬
ciently high speed ns to prevent the heel of the recorder
from striking the crest of the wave. That speed de- !
pends absolutely up6u the amplitude and rapidity with
which the diaphragm vibrates. If a diaphragm vi- '
brutes with great rapidity, a higher surface speed must
be imparted to the recording Burfuce to prevent heeling
than if it vibrated with less rapidity. Macdonald
himself admits that this is theoretically true (Mac-
donnld, Record, p.. 22, x-Q. 27). Edison, and we pre¬
sume all other skilled persons, knew this years ago
Eor example, Edison’B Patent No. 303,968 dated De¬
cember 4, 1888, statoB :

“ It might be supposed thhta cutting tool would

• h!»rXniH *r t l0 .r?ooytb“S point, and that the
. , heel of the tool would strike the bottom of the
V, groove and prevent the formation, of a perfect
y, record or obliterate the record us made by smooth-
?ng or pressing out the indentations more or less •
put I have found that the movement of the' record¬
ing surface is sufficient to ltoep tho heel of1 the '-

So far ns concerns Macdonald's theory ns tb; “ heel¬
ing ” in the formation of the record, rye assert without
hesitation that it is without basis, and that the true
cnnso for iinporfect reproduction in a duplicating ap-?
purntus is that which Macdonald has now adopted in
his application in interference, and which Edison fully
explains in his patent here involved — /. e., that sound
waves formed on records at slow speed are, when loud ,
enough to be heard through the horn, of such a form
that they pnnnot be accurately tracked by n spherical
reproducer. The heeling to which Macdonald refers is'
not even experienced when records are formed at the
ordinary and usual surface speeds.

Having referred to liis pretended theory of heeling,
for which in practice there is no basis, Macdonald
states that he obtains b more perfect master, and
secures, in consequence, more perfect duplicates there¬
from. Thus, he says (Macdonald, Beoord, p. 21, x-Q.

“ There are, I believe, many sound waves which
• are recorded and which can be reproduced well by
the reproducers simply touching the crest of the
record without' fully entering the groove. I
believe that it is not" so much in the reproducing
•- as it is in the recording. The grent improvement, '
1 in my opinion, is- in the faot that the rapidly- ;

moving surface of the Grand blank permits a much .

■ more nearly perfect record wave to be inscribed
, thereon, and that, once we have a perfeot negative
ty or record, we obtain necessarily mnoh better du-
/ plicates.” ■ , .

• resulting duplicate will be deeper 'iff the former' than in
the- latter, case, Mlicdonald would secure a duplicate
winch, on his own admission, could not be trnoked by
a spherical reproducer, because lie says, in the answer
. above quoted, that such a . reproducer would not ncou-
rntely track even the record of. the large master itself.
On the other hand, ns we have before said* with the
ordinary duplicating apparus using n master of standi
ard diameter, the record of which is not tracked to the
full depth by the reproducer, the recorder will cut in the
duplicate n record the depth of which corresponds in
extent to the amplitude of vibration of the reproducer,
and such a duplicate would be, therefore, just us effect¬
ive for the ordinary repoducer ns would be a duplicate
made from a master of large diameter. Macdonald
practioally admits this :

“ ?-Q- 3d. Did yon ever compare an original
standard record mudo at the usual surfaco speed
with a duplicate record made from a five-inch
master, so far as quality and other desirable
characteristics are concerned V

“ A. I have.

“ x-Q. 39. How did they compnre ?

“ duplicate8 are not so good, but they

“j"® better thnp ^uphpates made from nn ordinary

V “ *r.Q* 4°- wiittt respects are these duplicates
inferior to original standard records ?

“ A- I think there is a loss in that vague some-'4
tluug which we pall quality, and, also, in loudness
. in some portjons of the record ; though some of
the_soiinds' ;pe.em to be recorded sometimes even
louder than nji .original.' 4 .In general I would say
tbere is .a’ difference in loudness and quality as
. compared vyrth an original standard record (Mac-4
dounld, Bpcorjl, p. 27).

Thus, .MacdppaJ^ eyprosses the opinion .that a dupli-'
oatod mado by tlip’ppparntus of the issue is not so good
a^ an original standard record, but is somewhat better
.than a duplicate ^ppdefrorau standard-sized master.

26 ' "•

When the foot is recalled .that the latter duplicates can
hardly he distinguished from the original .masters, it will .
be seen that whatever advantages Macdonald may have
seoured by the present duplicating machine, were, on
his own admission, extremely small. ..It wus not until
Edisou invented his now reproducer that the advantage
of such a machine, became apparent. We have no doubt
that this was the reason which impelled Macdonald, to
his. course of inaotioU. In other words,, with the.ordi-
nary reproducer he saw nothing in it. . . ’■

. Furthermore, we' direct attention to the fact that if
• Macdonald believed in hip tbeoxy of heeling and that
spoil notion prevented the formation of an accurate
record, he must have seen that this objection u’onld be
met in the formation of a duplicate to as great an ex¬
tent as in the formation of an original, since it was his
object to make a duplicate which would correspond ns
closely as possible to an original. This may have
been ail additional reason for inaction on his part. It
does not, however, rest with us to explain his motives
or actions. It is sufficient only to say that the early
machine which Macdonald mado did not, on his own
admission, contain the invention of the issue, nor does
it appear from anything in the testimony that he even
had a conception of such an invention prior to the
tiling of his present application, which appropriates
bodily the theories advanced by Edison. If Mac-
douald's theories were made the basis of his applica¬
tion, it is appureut that the claims of the issue could
not have been properly supported by the some. What¬
ever may have. lioen the reason for Macdouald's failure
to do anything with his machine as it now stands and
as originally constructed, . the fact remains, from liis
own statement, that immediately after the m.aoliine
was constructed, it was changed by the substitution
of- the (pneumatic attachment, and, .was only returned
to its original condition n ; short, time previous .
to the taking of rbis testimony. It is true
that Macdonald states. (Macdonald Record, p. 16,-xrQ.

. 37

6), that,: he built , a 'socopd., machine- in the - fall
of 1899,, but the latter device is not produced, nor is it
■ adequately described ; ■ furthermore, suoli construction
was subsequent to' tlie filing of the Edison application.
After. tiie original machine was constructed, nothing,
so far as the proofs go, wasdpno with- it, since MiiCr
don aid’s, testimony ns to its opoyntiveness in its'orig?
inal condition is no.t corroborated. . It was not until
the Edison Patent had issued that Macdonald’s inter?
est in the apparatus .was aroused, and his application
was filed, based, as we have before said, on Edison’s
theory and in • utter defiance of the theories wliioh
Macdonald elaborated in his Grapliophone Grand, ap¬
plication of 1898, and which he still pretends to
believe in. Ho gives no explanation of his failure to
filO.an application for a patent at an earlier dute. He
states (p. 16, x-Q. 8) that all of his patentable ideas

, “ are submitted to the president of the Company,

, Mr. Easton, and, the patent couusel, Mr. Mauro,
'and their deoidiou'is the controlling factor in the
’• ' ’matter ; ” ’

that he did. not urge upon. those gentlemen the neces¬
sity of. tiling the application (x-Q. 10) ; that he does
not know why ' the application was not before filed
(x-Q. 11) ; that neither Mr. Easton nor Mr. Mauro gave
him nuy reason for their failure to file nn application
(x-Q. 12) ; that the American Grapliophone Company,
liis assignee, was financially able to file the application
at any time (x-Q. 14) ; and that between the mnking
of his original machine and May, 1900, patent applica¬
tions were filed in liis name on other, inventions. . ..
l We submit that when all the foots are taken into
consideration it: muBt be ndmittfid that Macdonald’s
) ) interest in ■ what may have been originally done
by him was extremely, slight. He does not seem

’to have oared anything about the apparatus .even
to- the extent -of. ascertaining ■ . whether an
application had been filed. ( Nothing, we submit, can

operation several: different times in another depart-'
ment" (x-Q. 5).

After referring to this testimony, the Examiner said
that

“ it is at least a question whether he states any-
' where in his deposition directly and unequivocally
that he ever saw a duplicate made on the machine.
Much less does he state what the character of the
product of the operation of the machine was.
And it may be said generally that both Macdonald
and Osborne fail to testify • directly that the
machine produced duplicates useful, commercially
or otherwise. In other words; the record fails to
establish that the machine operated success¬
fully. The circumstances in this case anno-
logous to those in Barr, v. hard <JS Ferguson,
70 O. G., 275, and, ns, the Examiner be¬
lieves, the language of the Court in that-
case applies to the facts in this with
even more force than to the facts in the case cited.
In both cases the senior party was iu possession
of a patent granted prior to the filing of the junior
party’s application. In the case cited the estab¬
lished Use of the lug or coupling was experimental.
In the present case the machine * was used iu.the
laboratory.’ In the case cited the • article was of
such a simple nature that it might almost be said
that one should be able to determine from inspec¬
tion alone as to its operativeness, and though the
couplings were tested by being fitted to a wooden
block and to an empty tank, the Court held that
‘ It was shown in the evidence that the pressure
upon the lugs when enclosing a filled tank is very
great and very different from that which is exerted
by screwing up the cqunoeting tap,’ and since
Burr had failed to show that the device
was operative, and operated in the position and
under the cironmstuuces for whioh it was designed,
he, the junior party, had failed to establish his
, case. If in regard to so simple a device at that in
the case oited, the Court required definite and un¬
mistakable proof of successful operation, how
mucli more should be required in reference to a
machine of maiiy' parts, and delicate iu its method
of operation. The following language also applies

to the present case : * The burden of proof im¬
posed upon appellant to make out his case in .a
dear and satisfactory manner, coupled with his
long and unexplained delay in applying for a
patent for this useful and valuable invention,
made it incumbent upon him to exhaust all
reasonable moans within easy reach to prove
the reduction of his invention to prnctice. It
appears that he wns not without means ;
that he was a practical business man, ns well ns
an inventor ; that he was to some extent informed
with regard to the prnctice of the Patent Office,
for he had twice before made applications for pat¬
ents upon his inventions.’ This holding of the
Court, so far as the Examiner understands, has
not since been modified, nor has the strict rule
there laid down been relaxed ; for in the late case
of Sharer v, McHenry, 98 0. G., 685, the Court
used this language : * This rule in respect of the
conclusive weight of evidence necessary to over¬
come the priority of invention evidenced by a
regular and formal patent has been long estab¬
lished, and observation of its operation in general
has had no tendency to incline us toward laxity iu
its application. ’ "

Conclusion.

The de'oision of the Examiner of Interferences should
be affirmed.

Respectfully submitted,

Fiiank L. Dyeii,

Of Counsel for Edison.

[20034]

Legal Department Records
Phonograph - Interference Proceedings

Edison v. Petit v. Capps (No. 22,202)

Edison v. Jones (No. 22,203)

This folder contains material pertaining to Patent Office proceedings
involving an application for a patent on a recording stylus, filed by Edison on
November 8, 1901, and competing applications filed by Frank L. Capps,
Joseph W. Jones, and Ademor N. Petit. The selected items consist of
Patent Office notifications, sworn statements, and memoranda regarding
Edison's role in the proceedings.

.r-

.Thoms.. Al.ya. .Edison.,.. .

Oars By or, Edmonds & Byer,

. . . #31..Has sail.. S.tre e.t ,

Now York, Nov/ York.

NOV 4 1902
DIVISION 23.

Please find below a copy of a communication from the Examiner concerning your

-application -f-or Sound- Rocordine- Apparatus, -f-i-lod-Nov* -3, -1903.-i-8or-ial
numbor 81,534.

Very respectfully ,

2 22 02

Commissioner of Patents.

Tour case, above referred to, is adjudged to interfere with others, hereafter speoified, and
the question of priority will be determined in conformity with the Rules.

The statement demanded by Rule 110 must be sealed up and filed on or before the

- . S>ZA.. . .... day _ , 1 90 Z, with the subject of the invention,

and name of party filing it, indorsed on the. envelope. The. subject-matter involved in the .
interference is

Count 1.

A cutting stylo for sound records having at ono ond a
thin laterally projecting circular head having its periphery
formed with a cutting edge.

Count 2.

A cutting stylo for sound records having at ono end a
thin laterally projocting head having its periphery sharpened and
its face concaved.

Count 3.

A cutting style for sound records provided at one end
with a laterally extending disk shaped head having it's periphery
sharpened to form a cutting odge. •

* . . t tl

Ser. No. 81,534 - 2. '*

Count 4.

A cutting stylo for sound records provided at one end
with a laterally extending disk shaped head having its periphery
sharpened to forma outting edge and having its face oonoavod.

Count 1 is your claim 1; claim 7 of an application of
Ademor H. Potit of Newark, New Jersey, for Phonograph, assigned
to The International Phonograph and Indestructible Record Co.,
Limited, of Liverpool, England, v/hose at tys. are L. VT. Sorrell and
Son, #302 Broadway, Now York,N.Y. , and claim 23 of on application
of Prank L. Capps of Newark, Now Jersey, for Duplicating Phono¬
graphic Records, whoso atty. is H. E. Knight ,Now York,N.Y. , asso.
atty. Philip Mauro, #620 P. Street, Washington, D.C.

Count 2 is your claim 2; claim 8 of Petit and claim

24 of Capps.

Count 3 is your claim 3 ; claim 9 of Petit and claim

25 of Capps.

Count 4 is your claim 4; claim 10 of Potit and claim

26 of Capps.

[ENCLOSURE]

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UNITED STATES PATENT OFFICE.

THOMAS A. EDISON :

-vs. - ;

ADEMOR N. PETIT j Interference No. 22,202.

-vs . - :

FRANK L. CAPPS.

PRELIMINARY STATEMENT OF THOMAS A. EDISON.

State of New Jersey, :

:ss:

County of Essex, :

THOMAS A. EDISON, having been first duly sworn, on
oath doth depose and say:-

That he is a party to the interference declared hy
the Commissioner of Patents November 11, 1902, No. 22,202,
between his application for Letters Patent for Sound Record¬
ing Apparatus filed November 8, 1901, Serial No. 81,634, and
the applications for patents filed by Ademor N. Petit and
by Frank L. Capps, as recited in said declaration; that he
oonoeived the invention set forth in the declaration of in¬
terference in the month of Deoember, 1898; that he firBt
made sketohes of a cutting reoorder embodying 3aid invention
in January, 1899; that he disclosed the said invention to
others in January, 1899; that he first made a model of said
invention about January 10, 1899; that he made a full-sized
operative devioe embodying said invention about January 16,
1899, and that said devioe was operated at that time and a
great many records were made and reproduced on wnx; that he
has made no other device embodying the invention except the

k.v.d.

Washington, D. C., - ,-r»r1Vh 7 . ,190— 3.

• • • US JiE INTERFERENCE

-Edison-v. Petit . \ No. 22,202. A

i Before the Examiner of Interferences.

■■ ■

Thomas A. Edison, c/o Dyer, Edmonds & Dyer, 31 Nassau St., N.Y.City.

Ucution from the Ex
Very respectfully,

The preliminary statement filed by ThomaB A. Edison, a
Junior party, failing to overcome the prima fade case made against
him by the respective dates of filing applications, and Ademor h.
Petit, another Junior party, having failed to file a statement
within the. time allowed for that purpose, Judgment on the record of
priority of invention is hereby rendered in favor of Prank L. Capps,
the senior party, in aocordanoe with the provisions of Rules 114 and
116..

, , : Limit of appeal will expire March 27,1903.

| MEMORANDUM

| HE EDISON GRAMOPHONE RECORDS.

There are two interferences:
lst;Edlson vs. Pettit vs. Capps, No. 22202, and.,

2nd, Edison vs. Jones, No. 22,203:

covers

(1) The issue of the first interference* Edison's
preferred form of side cutting recorder (shown in Nigs. 9
and 10 of the Edison drawings) • having a thin lateral
projecting circular edge with its periphery forming a cut¬
ting edge. On March 7th judgment was entered against Edi¬
son on the record for the reason that Edison's date of con¬
ception (December 1898) was subsequent to the filing of
the Capps application (September 9, 1895). If, therefore,
there is an interference between Edison and Capps, the lat¬
ter would certainly prevail. The Rules provide for pre¬
senting motions to dissolve interferences by the defeated
party on the record. In the present case, although Capps
sho’.vs a recorder which is .practically identical with that
suggested by Edison, yet the Capps recorder was to be used
for making phonograph and not gramophone records. In other
words, all that Capps did was to take an ordinary cylindri¬
cal recorder and grind off the heel behind the cutting
edge so as to make the recorder somewhat conical instead of
cylindrical. The only purpose for this was to enable the
recorder to cut a sharper record. Edison's idea was to
produce a recorder adapted for an entirely new purpose,
namely, to cut a zigzag record; such a recorder from Edi¬
son's point of view would be formed with two cutting edges,
one cutting as the recorder moves in one direction and the
other cutting as it moves in the other direction. From
Capps*’: point of view, the recorder would be one provided
with a single curved cutting edge. Apparently, there is no
interference between these structures, and unless the issue

is limited to a recorder adapted for Edison's purpose, it
would not define a patentable device. A motion to dissolve
the interference would he advisable, if it were not for the
fact that", the situation in the Edison-Jones interference is
such as to recommend doing nothing further with this gener¬
al matter.

(2) The issue in the second interference covers
broadly a recorder "provided with lateral cutting edges in
line with the path of vibration." Such a claim appears to
cover any recorder adapted to cut a gramophone record.

Edison alleges conception in December 1898, and actual re¬
duction to practice in January 1899. The Edison applica¬
tion was filed November 1901. Jones alleges conception in
August 1896 and reduction to practice in August 1896, se¬
cret use until October 1898 and since the last date "many
hundred such articles embodying his said invention have
been made and used, and many thousand sound records producer
thereby."

The Jones application was filed in Hay 1900.

It is doubtful whether Edison could overcome the Jones ap¬
plication even if Jones took no testimony. Admitting that
Edison's apparatus of January 1899 was a complete reduction
to practice, the delay in filing the application hntil No¬
vember 1901 would be very difficult to explain. Under
recent decisions, an inventor who merely reduces an in¬
vention to practice and does nothing further with it in the
way of presenting it to the public loses his rights as
against a later but more diligent independent inventor.

If the Edison case should be proved beyond any question,
it would only be necessary for Jones to show that in Octo¬
ber 1898 he had, as he alleges, made the invention and
since continued to practice it. Proof of that sort fur¬
nished by Jones would certainly overcome any testimony which
under the practice could be submitted by Edison.

Legal Department Records
Phonograph - Interference Proceedings

Edison v. Smith (No. 25,460)

This folder contains material pertaining to a Patent Office proceeding
involving an application for a patent on a sound box or diaphragm assembly,
filed by Edison on November 13, 1903, and a competing application filed by
Eugene C. Smith. The selected items include Patent Office notifications,
sworn statements, memoranda, and technical drawings regarding Edison's
invention and application.

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UNITED STATES PATENT OEEICB'.

Thomas A. Edison, )

vb. ) Intarfareno* No, 25,460.

Eugene C. Smith. )

-PRELIMINARY STATEMENT OE THOMAS A. KD1SON-

I State of New Jersey,)

) ss.:

County of Essex. )

THOMAS A. EDISON of Llewellyn
Park, Orange, County of Essex, State of New Jersey, being
duly sworn doth depoBa and aay that he is a party to the
interference declared by the Commissioner of Patents Novem¬
ber 28th, 1905, between hie application for Letters Patent
filed November 13th, 1903, Serial No. 180,998, for Apparatus
for Reoording Sounds, and an application for Gramophone
Sound-BoxeB, filed by Eugene C. Smith of New York City;
that he oonoeived the invention set forth in the deolaratioi
of interference on or about the 20th day of September, 1903;
that between September 20th, 1903 and October 1st, 1903,
ha first made drawings of the invention; that between Sep¬
tember 2oth and Ootober 1st, 1903 he first explained the
invention to others, and made further disclosures of the
Invention to others in the month of Ootober 1903. That
between Ootober 1st, 1903 and Ootober 20th, 1,903, he made
one or more full sized phonograph recorders embodying the
Invention in issue, and firBt operated the same for the

purpose of reoording sounds on or about October 20th,

1903 at his laboratory at Orange, Essex County, New Jersey;
that since the said 20th day of Ootober, 1903, a large num¬
ber of additional full sized phonograph recorders were made
embodying the invention in issue, and were put in UBe for
recording sounds at the Edison Laboratory aforesaid; that
said reoorders have been used from time to time since
that date; and that he never made a model of the inven¬
tion as distinguished from a full sized apparatus.

Xo.

Sworn to and subscribed before me j
this / day of Deoember,1905.)

Department of the Interior ,\
'ts/ea/ (0^'/aded- c^o'/cdi'f

0. 8. PATEMT ’OFFICE,

JUli 14 1906
LED.

In Re Interference

Sdlflon v* Smith

D. C...

-~-JvaV--l4tUaQ6!.290.-

Intf.#2*,460

I Before the f Primary Examiner, ■

Thomas A. Edi's on:i' .

Care prank L. Dyer,.

■E di a on-Lab or at oryy ■
0rtai£5e,H.J,.-

Please find below a, communication from the Examiner in charge of Nil
regard to the above-cited' i

Very respeclfiMy,

Commissioner of Patents.

S’bifl l* « iwtten lS' Edison, junior Hurts', to dissolve
the aboTG entitled Jnterfen'«<m. tpi the' fipllavlttg groundst,
First, IrregiOaPAty in declaring the , interference .
Second, that the '■%**$* Ip net patentable. .

Third, t,2wt Smith has no right to wake the claims.
»b* leeway «r* ii« follows t

'■ Count lx

A (ImwA box comprising a body, a diaphruejn
a#mt*}<X loosely Within : wsd«k body • a p*rru*iont s«a~plaKt4«',
connection applied in plastic condition to the periphery of said
diephraos end eaid body and pemittinc eairt disphragi) to yield

radially, . _ _ . . . .y m>

Count S): ’ r' , u ” ''

A counci bo* compriaiae a body, p. dlotphrtffjs
mounted loosely within said body and a pemenent «wi-plaatic rubber
connection applied .lit plastic condition to the periphery, of said
dlaphr&ao and said body and “permitting said diaphragm to yield radial
* ' \rtfr. y . • -

First* in regard to the patentability of the issues.

Considerable difficulty )m« boon found In ascertulnine Juat what
30a« of the torna contained therein eta art an road upon the
rofernno-'S and the involved applications.

The claim* ware framed by the off lot but at the time
they vrera framed a ole<o* tUstinotion between burned rubber used bjr
Edison and rubber eement need by Smith ms probably not known by the
examiner *

It has been bronchi out <|t the h««ri«s on this motion that
the essential oharaeteristior. of burnt rubber is that it remains
Tlstoue practically Indefinitely after its application, whereae , the
Rubber cement while it nay possibly be denominated “riant to" when
applied, the carbon bisulphide noon evaporates and leaves the
practically permanent &m rubber. If thie permanent gun rubber
ean be said to be “seKi-rluetie", it is no morett8eml-plaetie“
in the sen«e that the brant rubber is •pwal-plastle“ than is the
diaphragm fastening of K«I?onftld,;**83,t5a or JObMon,<4*91,07*,«

Acain, the counts when wtulyHised are found limited to a
connection for the bon «i»d diaphragm which is *plefti<»« fb.en
applied and which afterwards beOoRes permanently “eemi-Plastie*.

As now understood, Edison's owKeetioii retains indefinitely in the
seme cojidi tion after its upplieation so if it in properly denominated
“plaotie" when applied, it would be inaccurate to denominate it
■s«Ei-plastic“ in its so called permanent form. Hot eo, however,
with Smith* a connection or the connection of the Johnson or

McDonald patent*. In all of thOBe ,«me does change their decree of

finally'

plasticity. When they JMod&g .reach* their psnranent fora. It is

\UK-: .

difficult, probably impossible, for one to «ay which one best
answer# the limitation “(M»i=pln*ti«».

. Acei«, asith*8 ■« “plastic" connection is applied
only at .the “periphery", but in Edison*? case «»d in the patci*^ of
Johnson and McDonald, the connection extends a considerable
distant? w inwards from the periphery.

#53,4*0-- - -- - 3.

Finally, there has been a good deni said about the
diaphragm yielding radially. So obtain the bast restate either in
a pro&urtion or reproduction of a rooord it id le only necessary
that the diaphragm yield an almost infinitesimal amount and probably
in case of both the applications and the patents there are Maple
provisions made for all nscoeeary radial movement.

The limitation in the second count to a “rubber*
connection carries with it no new function common to both the
devices involved in the interference , Too action of the burnt .
rubber of Edison is i\» different from the dissolved rubber of
Smith as either are different from the so called wax or &m of.

Johnson or the cement sad rubber of McDonald. Indeed, Johnson’s
gum from the “elastic" quality ascribed to it may have boon rubber
gun, but Whether it w»o or ^at, He functions «seuc to be ae close to
those of smith* s device as fteith*,* device is to Kdiaon's .levies.

It follow* from what has been said shove, that the teres
of the issue* when construed sufficiently brsiiSP^b .include both the
devices involved in this interference, do not properly distinguish
from t3i* references siwl in accordance with tJt« practise outline^ in
Rule 134, a* emended June lF»190fi, the claims corresponding to, the
issue ,of this interference are rejected and July 30,190* at 3j».*j.
is set for a reconsideration or this action.

In taking the above action the examiner has not overlook¬
ed the argument of Snlth to the effect that inasmuch as his
preliminary statement carried the date of conception of the Invention
back of the references , that this interference should not be dissolved
in view of Forsythe ro Msfcurde,. 113 0.0.,10S-7. That dooleion :f
however, was based upon a state of fasts very different from the facts
in the present "cnee. In Forsythe vs Richards, one of the parties had
by oath under Rule 7# ante dated the refereucesand the other p«trty
had in his preliminary statement given a out* of conception ..ante
dating the referenss^ in the present ease Edison has not ante
dated the reference and from his preliminary statement it appears
that he ounuot ante date them so that if the issues ore not patents*!*

* ' * ■

..&St4M~r - -4,

the question of priority becomes a moot question, even though Smith
WKF onto dote the reference*, thin being true, if the iasuea are net
patentable to Kdicon, r.hia interference should bo (Uaoolred.

second, >'& to the irregularity. Edlflen contends that the
counts being for w article, should not define fluid article by itr.
method of manufacture, the 'oh,ieo*i«ne.bla clause being a "permanent
eemi-plastie connection applied in plastic condition".

While it i« true that aa a rule w article should not be
defined by its method of manufacture, th* "-Jtaminer dcee not know
how else the parti oulfir firtielft .in thin «<vse could be defined, thie
being true, it nay constitute an exception to the general rule, .and'
be permissible,,

.It mint be held, therefor*, that thoro ig no such
irregularity 41* would preclude « proper determination of the question
of priority and the notion -to dissolve or, tills ground must ho denied,
and limit of appeal from thie brunch of the decieion is sot to
expire Aug, li,19o«,

3rd, ita to Smith" n right to moke the claim .. Ho' undqubt-
y.-;edly;„': dieclesag the is sue except me to the term "gemi -olmatfflmgj .y :
•hen applied to hie permanent connection. Thie torm aeons to be . .

broad enough to ooy«p * connection between the solid and the plastic ’

probably

%» well eg between the plastic and the liquid and ia^amsrXf readable
therefore, upon the Smith disclosure.

It swat be held, therefore, that Smith haa a right to make
the claim* constituting the counts of the interference and from
tbia branch of the decision no appeal enn be taken.

*• "■

£1) 4 2—253.

regard to the abobi-eiieU case. - :-

~ Very respect fiilly,1

Commissioner of - Patents.

This is a re-hearlnc»as provided under amended Ruie 124,

of the examiner' a deolslon rendered In this interference July 14,
1906 ,rejeotinc tee claims of both applicants correspondinc to the

eoimte of the issue; that decision, however, upon careful 'r
reconsideration is believed to be correct and is repeated and; the
dales are finally rejected.

anith seems to be laboring under the impression. that if the
examlher finally rejects. .these claims, he will not be given the
opportunity to antedate oertain of. the references as provided lit
Rule 78, In this he is mistaken. In the recent decision, Sanders
~vs Hawthorne vs Hoyt, dated Sept. 18,1906, the Hon. Commissioner
„has. lipid in effect that in final rejeetions of the character of the
one above, that applicants will be given the opportunity upon tee
dissolution of the interference to file amendments to the finally
rejected claims or any other amendisent teat teenatHuie of tee :casef
required. In accordance with -this decision Smith will be given

#85,4*0 - iij}. •'

***• right after the dissolution of the interference to file the
necessary affidavit under rule 75, and the above final
rejection of his claims are based upon the ground that his

statement is not of such a character as it oan be
accepted in lieu of an affidavit under rule 75.

In the decision of the Hon. Commissioner above cited, it was
held that rule 10J>, as amended June 12, 1906, forbiding the entry
of amendments while the eases were in interferenoe,except as
provided fpr, and cortain other rules, is binding. Said

affidavit under rule 75 .therefore, cannot be entered in this

until

case or considered at all after the interference shall have been
dissolved.

Limit of appeal from this decision will expire Ootober 30,

Legal Department Records
Phonograph - Interference Proceedings

Edison v. Macdonald (No. 25,677)

This folder contains material pertaining to a Patent Office proceeding
involving an application for a patent on an amplification device, filed by
Edison on September 15, 1905, and a competing application filed by
Thomas H. Macdonald. The selected items consist of Edison's testimony
and exhibits, the brief for Edison, and the Patent Office decision. Edison's
subsequent brief on appeal has not been selected.

United States Patent Office.

EDISON

MACDONALD.

Interference

No. 25,677.

EDISON’S TESTIMONY AND PAPER
, : - V V ' EXHIBITS..

INDEX.

Preliminary Statement of Thomas A. Edison . 3

Stipulation. . . 23

Examiner’s Certificate _ 49

Depositions.

Ludwig E. Ott :

Direct- 1 . - . 6

John E. Ott :

Direot _ 10

Cross _ _ _ . _ _ 21

Erank L. Dyer _ , _ _ _ _ 24-47

Thomas A. Edison :

Direct _ _ _ ... _ 26

Cross _ - 1 _ 38

Erederick P. Ott :

Direct _ _ _ _ 33

Cross . 42

Be-direot... _ ... _ _ _ _ 43

William A. Warren :

Direot _ 44

Cross _ ...... _ ..... _ _ 46

„ Exhibits.

Edison’s Exhibit First Transmitter _ ...Offered 8

Edison’s Exhibit First Receiver - — .. " 8 ‘

Edison’s Exhibit Chalk Receiver _ _ • “ 12

Edison’s Exhibit Sketch of Chalk Receiver “ 14

Edison's Exhibit Second Chalk Receiver... " 14

Edison’s Exhibit Recording Telephone.... “ 16

mon driving menus for moving the carriage and rotat-
iug the friction wheel.

Count 4. In a phonic apparatus, the combination of
a rotating mandrel, a carriage movable longitudinally
thereof, a phonographic stylus and friction wliool car¬
ried by the onrringo, a friction mombor pressing on said
friction whool and connected to said stylus, common
driving means for moving the carnage and rotating the
friction wheel, and menus representative of sound vi¬
brations for varying the friction between tho friction
member and friction wheel.

UNITED STATES PATENT OFFICE.

Preliminary Statement of Thomas A.

Thomas A. Edison, of Llewellyn Park, Orange, in
the County of Essex and State of Now Jersey, being
duly sworn, doth dopose and say that he is a party of
the interference declared by the Commissioner of Pat¬
ents February 6th, 1906, between his application for
letters patent filed September 16th, 1906, serial No.
278,549 for recording tolephonos, and an application
filed by Thomas H. Macdonald for phonic apparatus
referred to therein ; that ho conceived the invention
oontniued in olaims 3, 4, 6 and 6 of Iiis said applica¬
tion Serial No. 278,549 during tho month of April,
1902 ; that during the month of April, 1902, he made a
number of experiments for the purpose of demonstrat¬
ing, and did demonstrate, the. operativeuess and
utility of 'the said invention ; that during the month
of April, i.902, he made skotches of tho invention, and
at that time first explained the invention to others ;
that in the month of May, 1 902, full sized working
drawings of the invention were made ; that on May

Preliminary Statement.

Notice.

embodying the said invention was commenced, and
said full sized apparatus was completed in the month
of J une, 1902 ; tlmt be made no other apparatus em¬
bodying the invention, nor was any model of the same
constructed.

Thomas A. Edison.

Subscribed and sworn to be- )
fore me this 23d duy of >

February, 1908. )

Frank L. Dyer,

[seal.] Notary Publio.

UNITED STATES PATENT OFFICE.

Thomas A. Edison !

I Interference
yB- f No. 20,677.

Thomas H. Macdonald. |

Messrs. Mauro, Cameron, Lewis & Massie,

620 F Street, Washington, D. C.

Gentlemen : — You aro hereby notified that on
Tuesday, July 24, 1908, at my office, Edison
Laboratory, West Orange, New Jersey, nt 10:30 in
the forenoon, I shall proceed to take the testimony
of Thomas A. Edison, Frederick P. Ott, John F. Ott,
and JohuF. Bandolpli, all of West Orange, New Jersey,
and possibly others, as witnesses in behalf of Thomas
A. Edison • The examination will contiuuo from day
to day until coraplotod. You are invited to attend
and cross-examine.

Very respectfully,

Frank L. Dyer,

Attorney for EdiBon.

Dated Orange, N. J., July 13, 1906.

Timely Bervico of the above notice accepted this
16th day of July, 1906.

Maoko, Cameron, Lewis & Massie,

Attorneys for Macdonald.

L. F. Ott.

UNITED STATES PATENT OFFICE.

Testimony on behalf of Thomas A. Edison taken at
the Edison Laboratory, West Orango, N. J., commenc¬
es Tuesday July 24, 1908, at 10:30 A. M., before Heii-
dekt W. Knight, Esq., a Master in Chancery of Now
, "G'soy 1111(1 Special Examiner by consent, pursuant to
tho unuoxed notice.

Fhaxk L. Dveii, Esq., for Thomas A. Edison.

C. A. L. Massie, Esq., for Thomas H. Mac-
dounkl.

Ludwio F. Orr, a witness produced on behalf of
Thomas A. Edison, being first duly sworn and asked
questions by Mn. Dveii, deposes ns follows :
tiou 1 GlV° y°m lltt'“0’ “g0’ 1'osil1onco and occupa-

nnma 18 Lmlwig F. Ott; I am 24 years of
ago, residing at 175 High Street, Orange, N. J. My
occupation is ranking experiments.

Q. 2. Are you employed by Mr. Edison ?

A. Yes, sir.

Q. 3. When did you leave school ?

A. I left school in 1902, I graduated in that year.

L. F. Ott.

Q. 4. Prior to lohviug school did you ever do liny
experimental work in tho Edison laboratory ?

A. I did experimental work at tho Edison laboratory
during summer vacations prior to leaving school.

Q. C. Boforo leaving school did you over do any ex¬
perimental .work at the Edison laboratory in connec¬
tion with schemes for recording telephone messages
with phonographs ?

A. Yes, sir.

Q. C. Do you recall wlion that was ?

A. I could hot recall exaotly but it was prior to
1902.

Q. 7. . What did the experiments you have referred
to consist of?

A. The experiments consisted of a phonograph in
one room which had attached to it a telephone trans¬
mitter and another phonograph in another room hav¬
ing attnclied to it a telephone receiver ; simply con¬
nected the telephone receiver and tho transmitter to a
ragular phonograph spenker on one end and a recorder
on the other, nnd then we had a battory and coil inter¬
posed between tho two instruments, also a magnetic
arrangement for releasing tho governor on both ma¬
chines simultaneously when the telephone was stnrtod.
We had a separate battery and lino for operating tho
magnetic starting device of both machines.

Q. 8. What was the idea of this experiment ?

A. The main idea was to use it in telegraphing, sub¬
stituting tho telephone for a telegraph in railroad
statious so that thoro would be no mistake in the mes¬
sages received and a record of them could be kept.

Q. 9. I call your attention to nnumber of pieces of
apparatus in this room and ask you if you find here
the machines with which you experimented prior to
the year 1902?

A. There are two machines here which I experi¬
mented with, one is the telephone transmitter and the
other is the later style of recorder.

Q. 10. Please point out the transmitting instrument ?

diaphragm of the recorder and thereby innko a record,
but I found that such a record was very faint and at
Mr. Edison's suggestion therefore the form of re¬
ceiver at present on the machine was con¬
structed. With this receiver the diaphragm, which
was vibrated liy the receiving magnet, was connected
directly with the recording stylus of the phonograph
so that there was less opportunity for mechanical loss
and consequently the records made wore considerably
loudor. The diaphragm used with this roceivor is a
steel or iron diaphragm like tlio ordinary diaphragm of
a telephone receiver.

Q. 14. Do I understand that those experiments were
made by you prior to or after the year 1 902 ?

A. I thiuk they were made prior to the year 1902.

Q. 16. That was bofore you loft school ?

A. Before I loft school. Yes, they were, before I
loft school.

Q. 16. And with the machines exactly ns they are
now constructed, prior to that time 1

A. The same construction and the same machine.

Q. 17. How successful wore tlio experiments which
you made with theso machines ?

A. With the first form of recorder we were able to
distinguish the words by means of an ear tube ; with
the second form of recordor, which is the . one now on
the mnohine, we were able to distinguish the wordB by
means of n horn, showing that they were very much

Q. 18, In a statement which I propose to subse¬
quently iutrod ace, taken from tho books of the Edison
Laboratory, it apponrs that in connection with experi¬
ment number 1148 entitled " Railway telephone ex¬
periments for block signals," yon were omployed on
that experiment in the months of July and August of
1901. Did you do any other experimenting on the
use of telephones for railway block signals other than
in connection with the two machines which have been

J. F. Ott.

sentativo letters iu ink iiud I will ask you to kindly
refer to the sumo uml tall me what they relate to ?

A. The letter a is tile diaphragm, the letters 44 mo
tho two chalk cylinders, the letters to are the commo¬
tions of the clmlk cylinders, and tho letters dd are the
metallic springs connected to the diaphragm and which
rest on the cliulk.

Q. 21. Is this general scheme of making a telephone
receiver by cnusing.mi electrode to pross upon a rotat¬
ing chalk cyliuder in such a way that the eleotrical
impulses. will vary tho friotiou botwoon tho electrode
aud the chalk cylinder, a now suggestion in recent
years ?

. Objected to ns leading.

A. No ; that is tho ordinary chalk receiver or moto-
grnph that Mr. Edison invented iu the seventies. . .

Q. 22. I observe on this same sketch the drawing of
nuothor device iu which a single chalk cylinder was
used. What was this apparatus ?

A. It is similar to the one above only it bus a single
chalk cylinder.

Q. 23. I notice on this sketch the impression by a
rubber stump of the name “ J. F. Ott ” ; did you mako
that impression on the sketch ?

A. I stamped thut on.

Q. 24. Is it yonr custom to stamp your names on
sketches handed to you by Mr. Edison ?

A. Yes, sir.

Q. 25. Doesyour handwriting appear anywhere upon
this sketch ?

A. Yes, sir ; tho date.

Q. 2G. What is that date ?

A. May, 1902.

Q. 27. What is your custom in reference to dating
of sketches ?

: A. So that we know when the sketches are handed

J.ir.ott.

nm momitoil npou the same shaft ns the cyliud
.viiig thereon a little friction roller that rotates I
nlk through a little worm and worm gear.

Q. dO. When was this machine built ?

A. About May, 1902, ns uear ns I now remember.
Q. 41. Do you remember who worked on this n
iue, that is, who did the actual practical work 1
A. If I am not mistaken 1 think it was Hofbaner.
Q. 41^. Are you able to state how muoh time w
pended on this machine, liow long it took to finish
or it was started ?

\. That can be found on the time sheets, but I <
: remember.

Tho machine last referred to by the witne
is offered in evidenco and mnrked “Edison
Exhibit, ^Recording Telephone.”

Exhibit objected to as irrelevant, and immi
torinl, and as not sufficiently proven.

!• 42. Can yon produce any sketolies illustrating til
tiouiur arrangement of driving meclinnism discloso
" Ellison’s Exhibit, Uncording Telephone ”, where!
iction wheel is rotated by an auxiliary drum an
imunicatos movement through worm gearing to tb
Ik cylinder ?

which the blank is placed, the letter 4 is the auxiliary
cylinder carried on tho mandrel shaft, e is the friotion
rollor bearing ou tho auxiliary cylinder 4 and driven
thorofrom ; the friction roller c drives the worm <1
which engages tho worm gear e ; tho worm gour e
drives the shaft f ou which is mounted the chalk cyl¬
inder y ; engaging with tho chalk oylindor is an electrode
A which is connected, with tho diaphragm i of tliere-
cording apparatus. Tho sketch illustrates the idea of
driving tlie ohalk cylinder of an ordinary motograpli
through the same power that rotates the mandrel. The

J. F, Ott.

Q. 50. As I understand then, this sketch was in
your possession nt least ns onrly ns May 29th, 1902 ?

A. Yes, sir. - .

Q. 61. I will ask yon to explain the parts of this
sketch by reference to the lottors in rod ink which I
have placed thereou ?

A. This is the same machine that is illustrated in
the sketch I have just produced. Tho mandrel a car¬
ries the phonogrnph blank ou which a permanent roo-
ord is to bo made, b is tho anxiliury cylinder with
which engages the friction rollers; this friction roller
drives tho shaft d, on tho end of which is mounted a
worm e ; the latter engages with a worm gear /on tho
shaft <j and rotates the chalk cylinder h ; i is tho dia¬
phragm to which is connected the electrode j bearing
against tho chalk roller A ; tho arm k offers a support
for the shaft g ; l is tho usual phonogrnph arm which
carries tho recording and reproducing mechanism and
which is fed longitudinally of the blank or record ; ns
the recording mochnuism feels longitudinally, tho
friction roller c will be fed longitudinally of the auxil¬
iary cylinder b ; in is the recording stylus wliioli en¬
gages tho blank so ns to form a permanent record.

The larger sketch just reforrod to by witness
is offered in evidence and murked » Edison's
Exhibit Recording Telephone Sketch No. 2.”

Exhibit objected to as irrelevant, immaterial
and not sufficiently proved.

Q. 52 Can you produce any sketch of Mr. Edison’s
illustrating more iu detail than the two sketches last
referred to do. tho t... ..

Q. 54. Docs that date indiente when the sketch was
received or dated by you ?

A. Yes, it was dated by mo in May, 1902.

Q. 55. I will ask yon to kindly explain this sketch
by roforonco to tho letters that I have placed thereon

A. Letter a indicates the' body of the recorder car¬
rying the dinphrugtn b and to which is' pivoted the
ordinary floating weight e; a small stylus lover d is
monuted on tlio floatiug weight iu the usual way
and is connected by a link c to diaphragm b;
at the forward end of the stylus lever d
is ' the usual recording stylus / mndo oi
sapphire ; mounted above tho diaphragm b is a second
diaphragm g, tliero being a space of about one-eighth
of au inch between tho two diaphragms. Tho fraction
“ 1/8 ” on tho sketch [is in Mr. Edison's handwriting
os a guide to me in spacing those diaphragms. Con¬
nected with tlio diaphragm ij is nil olectrode spring h
carrying a metallic button i near its upper end which
boars on the chalk roller/ ; the chalk roller/, button i,
electrode spriug A and diaphragm g constitute an
ordinary motograpli or chalk receiver, tho arrangement
being such that vibrations communicated to the dia¬
phragm g will be transmitted to the diaphragm b and
thereby recorded ou tho blank.

Sketch lust referred to by witness offered in
evidence and marked “Edison’s Exhibit, Re¬
cording Telephone Sketch No. 3.”

Exhibit objected to as irrelevant, immaterial

ii8 particular machine the job number 1283?

A. raid; wo give every job a unmber so that the
prkrnon working upon it will only linvo to carry
number ou their time sheets, and oftentimes do not
]0W wlrnt they me working upon, because it has only
number. 1

Q. 58. Pleaso read on the record the entry in your
dor book relating to this particular order.

A. The entry is as follows : “ 1283. Bocordinn.

J.F.Ott.

J. F., Randolph.

;o, but wore brought iuto my , room by 1
oiug tbe next adjoining room.

77. Wlion did you hbo those sketohos las
?

could not stuto when I did seo thorn las

Counsol lor, Macdonald renews tlio obi
to tlio various exhibits and objects to thi
deposition ns irrelevant and immaterial.
(The signature is waived).

John F. Randolph.

It is hereby stipulated and agreed 1
counsel that if John F. Randolph were r<
called and sworn as a witness on be

F. L. Dyer.

F.L. Dyer. 20

unou «pent a woek in experiments on this
>rk at a charge of S12 and that for the week
ding December 18, l'J02, Ludwig Ott spout ten
urs on the work at a eost of $1.50.

(The statoinout referred to in tho above stipu-
od testimony is offered in oVidonce and
iked “ Edison’s Exhibit, Book Extracts.")
That he has made extracts from tho account
oks, showing charges against experiment No
(8, referred to in tho deposition of Ludwig
Ott, and tho same is herewith presented,
at tho items charged against this experiment'
mmenced in July, 1901, and ended in Sep-
nbor, 1901, and that the total cost of the
Ilk amounted to $187.09; that the abbrevia-
u “ Std Phonos less reproducers ” in said
temout under dnto of August 29th, 1901,
[mates two Standard phonographs, and that
i abbreviation “ dold 8/3 ” indicates the de¬
ny of said phonographs by tho Edison
onograph Works to the Edison Laboratory
August 3, 1901. __ J

The statement Inst referred to is offered in
lence and marked “ Edison’s Exhibit Ex¬
its— Experiment No. 1148.”)
louusol for Macdonald waivos the production
1m books themselves nud admits the stale-
lts in lieu theroof but objects to the same os
levant and immaterial and as incompetent to
re anything in this interference.

Frank L. Dyer.

• Dyeii, having been first duly sworn ns a
behalf of Thomas A. Edison, deposes and

tiunously since 1897. I find that upon referring to
my personal diary, which I have kept continuously
since 1899, that on May it, 1902, 1 visited tho Edison
Laboratory and there witnessed an experiment by Mr.
Edison in connection with recording telephones. The
experiment was conducted in what is < called the Gal¬
vanometer Boom of the Laboratory, which is one of
the outbuildings consisting of a long main room and
two ante-rooms. Mr. Edison was seated at a table in
one of the anto-rooms and hud before him tho mnehine
introduced heroin as “ Edison’s Exhibit, Second Olialk
Beceivor,” which 1 recoguized us, au ordinary moto-
grnpli. This receiver wns connected with a
transmitting iustrumout iu the main room.
A pair of ordinary phonograph listening tubes
were connected with the receiver and upon turning the
crauk the message from tho transmitting apparatus
was received.

I do not recall so vividly the character of the trans¬
mitting instrument, but I am reasonably certain that
tho instrument used wns the machine produced herein
as “ Edison's Exhibit, First Transmitter."

The deposition of the witness is objected to
ns irrelevant and immaterial, and counsel for
Macdonald particularly objects to the torm
“ ordinary motogrnph ” as misleading nud with¬
out any understanding in the art.

No cross-exnminntion.

(Signature waived.)

In view of imperative engagements of counsel
for both parties, and of Mr. Edison, it is stipu-
latod and agreed that Edison’s time for closing
his prima facie proofs be extended to Septem¬
ber 15, 1906, other times to bo extended, ac¬
cordingly.

• Adjourned subject to notice.

Q. 4. What was the purpose of this apparatus ?

A. It is one of the parts of a system of recording
telephonic speech and sounds.

Q. 5. I call your atjtoutiou to another piece of ex¬
perimental apparatus and ask you if you can identify
the same ?

A. Yes, it is another part of tlio same scheme.

Q. (i. What was this apparatus used for ?

A. For transmitting tlie recorded speech over a tele¬
phone. This apparatus is the recording part, for
recording the telephonic signals ou the phonograph.

Q. 7. Wliat commercial use, if any, did you expeot
to make of this apparatus 1

A. The endeavor to produce a recording telephone
arose from the desire on the part of some of the rail-

T. A. Edison.

T.A. Edison.

Q. 10. I call your attention to another pioco of ap¬
paratus nud ask you if yon know wiiat it is ?

A. It is what is known ns the olcctro-motograph, ap¬
plied to u telephone, wlieroby tlio telephone is nctuatod
hy impulses of electricity noting upon n porous cylindor
in n manner now, ns yet, unknowu.

Q. 11. When did yon invent the olectro-motograph ?

A.. 1873.

Q. 12. Whilt wns the object of this apparatus ?

A. The only practical applientiou over nmde of this
discovery was its connection with the receiving tele¬
phone for the purpose of amplifying sound. It was
called the loud speaking telephone, but never caino into
practical use on account of the fact that it wns too
uncertain, its modo of action being not understood.

Q. 13. Is this apparatus also known ns the chalk
receiver ?

A. Yes, it has been culled that.

,Q- 14. Was the moto-gmph or chalk receiver pat-
snted by you ?

A. Yes, sir, some time prior to 1880.

Q. 15. What were the difficulties encountered in
lonnection with the chalk receiver or moto-grnph to
vhich you have referred ?

A. Uncertainty. Up to the present time I have been
luablo to produce a dozen cylinders which would give
lie same results, probably dno to the fact that the
ause of the movement produced by the electric wove

Tho apparatus last referred to by the witness
is "Edison’s Exhibit, First Chalk Receiver."

Q. 1G. I call your attention to another piece of np-
laratus and ask if you can identify it ?

n'tono fS a. 0l,mllt recoivor {or “ telephone, one I used
u 1902 for testing a great many different kinds of chalk
ml other finely divided material, compressed in cyl¬

inders, to seo if I could not got something having some
degree of constancy.

Q. 17. Do you recall wlion this apparatus was made?

A. Some time in 1902 ; it might have beeu a little
earlier, but I think around about that time.

(The apparatus last referred to by tho witness
is " Edisou's Exhibit, Second Chalk Receiver.”)

Q. 18. I show you a note (“ Edison’s Exhibit, Note
No. 1 ”), nud ask you if you onn identify the same ?

A. This note was written by me.

Q. 19. What does it relate to ?

A. It relates to this experiment of the recording
telephone.

Q. 20. What wns tho purposo of the experiments
referred to in tho note ?

A. Those were the pressure foots or electrodes
through which the current passed into tho chalk
cylindor.

Q. 21. Why did you suggest the use of several dif¬
ferent kinds of electrodes ?

A. I wanted to see whether the unture of tho metal
or substance in contact with the chalk hnd any influ¬
ence upon the result.

Q. 22. I bIiow you another sketch (“ Edison Exhibit
Note No. 2 ”), and ask you if you can identify the

A. Yes, this is my handwriting.

Q. 23. What was the purpose of tho experiments re¬
corded on this note ?

A. To study this phenomena with a view to finding
out tho cause of the phenomena.

Q. 24. Do you recall what was dono with these two
notes or to whom they were handed ?

A. To Johu Ott, the experimental superintendent,
and I believe most of them wore made.

Q. 25. I show you another sketch (“ Edison’s Ex-

T. A'. Ellison.

, l>ibit. Sketch of Chalk .Receivers”) and ask you if you
can idontify it 1

A, Yos, tliis is ouo of tho skotclies, showing one or two
vnrietiosof hand revolving chalk telephones for use in
those experiments.

Q. 20. What relation, if any, was there between this
sketch and the two model exhibits Edison's Exhibit,
First Chalk Receiver ” and “ Edison’s Exhibit, Second ‘
Chalk Eoeoiver”?

A. I think those wore rough indications of what I
wanted, as shown in the two model exhibits.

Q. 27. I show yon a skotoh (•• Edison’s Exhibit, Bo-
cording Telephone Sketoh No. 1 ”) and ask yon if you
can identify it. ?

A. Yes ; this is a sketch by myself.

Q. 28. What does it represent ?
r t' ? is,'P‘'obab'r 801,10 sketc1' m»‘1° in explaining to
John Ott how to construct tho final device which I
W“ 80lnf? to P»t on tlio recording telephone.

Q. 29. I show you another sketch (“ Edison’s Exhibit
Becordmg Telephone Sketch No. 2”), and ask if you
can identify it ? J

A. That was anothor sketch explanatory of how to
constiuct the final instrument.

Q. 30. With regard to this sketch No. 2, are you
able to describe tho apparatus which you expected to
Ztf rerol'onco ‘o the red letters appearing on the

A. A is the chalk cylinder ; w the recording point;

.J 'l lj°C y 'o d,11R tll<s diaphragm ; g is the. shaft
n I cl. gives rotation to the chalk ; /is: the worm gear •

( 10 worm arm, and c a wheel which runs on the

cy rader connected with tho phonograph mandrel; the

rot t, on of tho cylinder l gives motion sufficient to
me T- ! V01'J slowly and at the same

drum “ Cy iKlei' T" tho ^nrRCr pnrt of tho

drum in rotating;.; ,s what we call tho pen or the
electrode leading the current into the. chalk!

Q- 31. I show you another sketch (“Edison’s Ex¬

hibit, Bccordiug Telephone, Sketch No. 3 "), and ask
you if you can idontify it ?

A. This is a part of tho apparatus, ; being tlie chalk,
i the pen or electrode which is connected to the two
diaphragms g anil b ; f is the recording mechanism.

Q. 32. Did you make this last sketch ?

A. Yos, sir. •

Q. 33. Did you over build uu apparatus in accord¬
ance with recording tolepliono skotclies, Nos. 1, 2
and 3?

A. Yob.

Q. 34. What was done with tlieBe three sketches ?

A. I gave them to John Ott.

Q. 35. What did lie do ?

A. He constructed the mnehino.

Q. 36. I call your attention to a piece of apparatus
before you aud ask you if you can identify it V

A. Yes, sir; that is the complete machine, tlie re¬
cording telephone.

(Witness refers to “ Edison’s Exhibit Rocord-
iug Telephone.”)

Q. 37. That machine then was constructed after the
three sketches ?

A. Yes, sir.

Q. 38. Do you remember when this machine was
built?

A. 1902.

Q. 39. What, if anything, was done with the raaobino
after it was finished ?

A. Just tested to see whether the mechanism was all
right. .

Q. 40. What kind of a test did you make of it ?

A. Just ran it bnck and forward.

I-" Q. 41. Did you find that it operated satisfactorily ?
1 A. Yes; it operated all right.

\ Q. 42. What then. was done with it? ■"

I A. It was set aside.

motogmph principle to tbe apparatus.

Q. ‘14. Your application for a pntont on this appa¬
ratus was not filed until Septomber 15, 1005; why did
you wait ro long before applying for a pntont after
completing tbo machine?

A. Because I thought I had applied for a patent.' I
remember writing out tlio specifications, and I believe
I sent them to Now York, but somehow, by chaugo
of patent lawyers and such, I found it was never filed.

Q. 45. "Wlmt change, if any, did you make in your
patent lawyers ?

A. I made change from tbe firm of Dyer <fc Dyer to
Mr. Frank L. Dyer, who came to the laboratory and
opened an office in April, 1003.

F. P. Ott. 33

cylinder, but so far I have been unable to find out the
cause or to produce an evon result.

Q. 49. That is to say, as I understand it, some of
tho chulk cylinders work satiRfactorily and others do

A. "lies, although made exactly the same iis fnr ns we

Q. 50. When was this machine operated ; nB soon ns
it was built or later ?

A. As soon as it was built.

OkosS-examination by Mn. Massie :

x-Q. 51. How do you identify these two exhibits,
“ Edison’s Exhibit, First Transmitter ” and “ Edison’s
Exhibit, First Eceoiver ” ?

A. By seeing them around tho laboratory and know¬
ing of their construction.

x-Q. 52; Tho same answer will apply to the other
physical exhibits ; yon identify them in the same,
way ?

A. I identify them by knowing of their construction
and operation, and long experimentation.

x-Q. 63. Mr. Frank Jj. Dyer, your present attorney
was a member of the firm of Dyer & Dyer, 'your former
attorneys ? ,

A. Yes, sir.

I never operated them togotlior, but I operated
irunsmitter.

14. How did you operate this transmitter nlono ?
Iu conuectiou with the chnllc receiver.

15. Do you remember when theso two pieces of
ratus woro built ?

I cannot recall the exact date, hut it was a long
ago.

16. Do you recall ovor seeing Ludwig Ott ever
rimenting with this apparatus ?

Yes, he helped us out on it.

17. - Was Ludwig Ott any relation of yours ?

Yes, ho is my nephew.

18. I call your attention to another piece of ap-
;us (“ Edison's Exhibit, First Chalk Eeceiver ”)

Last answer objected to ns incompetent.

oits first I'rausinittor nud " First Receiver ” ?

A. Yes, sir.

Q. 30. What is the purpose of n chalk receiver 01
itograph ; to modify or amplify the sounds ?

A. To amplify the sounds.

Q. 31, 'lo what extent would the sounds be am-
ified ?

A. Oh, a great deal louder than the ordinary tele-

Q. 32. 1 show yon u note (Edison’s Exhibit, Sketoh
Chalk Receivers), and ask yon if you ever saw it
fore ?

A. Yes, sir, . I did.

tj. 34. Whoso handwriting is it?

A. Mr. Edison’s.

C2. 35. Do you know when this sketch was mads ?

Q. 38. In whoso handwriting is that ?

A. Mr. Edison’s.

Q. 39. Do you know wliat it relatos to ?

A. It relates to the same tiling ; he used these dif¬
ferent metals for pens for the motograph.

Q. 40. I show you another note (“.Edison’s Exhibit
Note No. 2 ”) and ask you if you evor saw that note
before ?

A. Yes, sir, I did.

Q. 41. Whoso handwriting is that ?

A. That is Mr. Edison’s.

Q. 42. What doos this note relato to ?

A. It relates to different compounds for chalk

Q. 43. Did you make experiments in the ohulk
rollers ?

A. Yes, sir.

Q. 44.- How many experiments did you make ? .

A. Oh, we must have made four or live hundred of
them with different compounds.

Q. 45. What was tho purpose of these experiments ?

A. To get a chalk which would be more suitable
than the proseut one.

Q. 40. Are you . still working ou experiments iu
chalk?

A. Yes, sir, off and ou.

. Q.-47. Have you yet succeeded in finding a per¬
fectly uniform material ?

A. Not yet, no.

Q..48. Do I understand from you that in the caBe of

45J. WJiftfc about tuo others.

Some of them are fair, but they ilo not seem ti
mstuut ; they do not stnud np.

50. That is, with the same materia] yon get dif

Yes.

51. I show you a sketch (“ Edison's Exhibit, Re
ng Telephone Sketch No. 1 ") and ask you if you

52. Who made this sketch ?

Mr. Edison.

53. Do you know when it was that yon first st

i‘l. Do you know why John Ott had this sketch ?
i-’o build the mncliiuo from.
i5. Can you describe the machino which the
is designed to represent from the letters of

0. Will you do so?

Plmt is the machine over there (indicating).

7. But can you refer to the lotters and say whnt
Jproseut ?

: is the cylinder and b is the drum to rotate the
oiler ; c is the roller.

3. The chalk roller?

(o, the rubber roller, rotated by. the drum ; and
io worm shnft which is operated bytho small
1 wheel, and e is the small wheel that, is turned
worm ; f is the shaft turned by the worm wheel,

1 Chalk roller and h is the pen or electrode ; i is
plirngm connected to the pen.

'• 1 8l,ow -von “ “l“tch (“Edison's Exhibit. Re¬

cording lelophono Sketch No. 2 ) and ask you
ever saw that before ?

A. Yes, sir.

Q. CO. Do you know who mndo the sketch ?

A. Mr. Edisou.

Q. 01. Whou did you first soo this ?

A. In 1902, in John Ott's room.

Q. 62. Whnt was the purposo of this sketch ?

A. The same as the other.

Q. 03. Cnu you doscrilio the innchiue that this
is designed to illustrate ?

A. ais the drum or mandrel carrying the
cylinder ; b is the drum rotating with the n
driviug the rubber wheel o which drives the s
and then it drives the worm e and the worm w
which rotatos the shaft <j carrying the chalk rolli
is the diaphragm connected by the electrode j
bears on the chalk roller ; Ic is the arm supporti
shaft g, and m is the recorder which makes the
in the wax.

Q. 64. I show you a third sketch (“ Edison'H li
Recording Telephone Sketch No. 3 ”) and ask
you ever saw that before ?

A. Yes, sir.

Q. 65. Wlion did you see it and whore ?

A. In John Ott's room in 1902.

Q. 66. Who made this sketch ?

A. Mr. Edison.

Q. 671 Can you describe tile device illustral
this sketch?

A. a is the frame of the recorder, b is the lowi
plirngm, e is the floating weight, d is the siiial
connected to the lower diaphragm liy the link
carrying the recorder stylus f at the other ent

F. P. Ott.

F. P. Ott. 41

Galvnuometer Hoorn and mu it and tested it, and as
far as the machine. went it was all right.

Q. 79. How did you operate this machine, by. hand
or by the electric motor in it?

A. By the eleotrio motor in it.

Q. 80. How long did yon operate it ?

A. We ran it lor about fifteen or twenty minutes to
see everything run all right.

Q. 81. How did it work ?

A. Everything worked all right.

Q. 82. Did you operate it long onougli to cause the
carriage to travel oue or more times ncross the man¬
drel ?

A. Oh, yes, sir.

Q. 83. Did you fiud during this operation that the
chalk wheel was turned properly ?

A. Yes, sir.

Q. 84. The record books of the laboratory (Edison’s
Exhibit Book Extracts) show that you were employed
in connection with experiment' number 1283 entitled
“ Recording Telephone" from Juno 4, 1902, until Juno
30, 1902. Are you able to state whether the mnohino

Edison’s Exhibit, Recording Telephone ” was con¬
structed during that period ?

A. It was.

Q. 85. That is to say during the time you were
working on tho chalk-rollers this machine (Edison’s
Exhibit, Recording Telephone) was built and finished ?

A. Yes, sir.

Q. 80. Wan it operated dnring this time or after¬
wards ?.

A. It was operated during the time we were work¬
ing on the chalk rollers ?

Q. 87. Since tho construction of this machine have

W. A. Worron.

William A. Warren.

William A. Waiibem, n witness produced on bolinlf
of Thomas A. Edison, having boon first duly sworn, in
nuswor to questions propounded by Air. Dyer, testified
as follows :

Q. 1. Ploaso give your name, ago, residence and oc¬
cupation.

A. My age is twenty-six ; I reside nt 2 University
Place, Orange, N. J. ; and my occupation is that of a
manufacturer of olectricul measuring instruments.

Q. 2. Arc yon familiar with mechanical and electri¬
cal subjocts 1

A. Yes.

Q. 3. State briefly what your education was in theso
subjects ?

A. I spent four years in Columbia University from
tho fall of 1898 to the spring of 1902 in the electrical
engineering course and during that time experimented,
outside of the course, on various schemes of my own,
both mechanical and electrical. In the spring of 1902,

W. Ai Warron.

months, and until about September 1st, when I re¬
turned to the laboratory.

Q. 4. What wore your duties at tho works of the
Edison Portland Commit Compnny ?

A. Electrical engineer, devising now sohemos for tho
application of electricity at tho works.

Q. 5. You say you came back to tho laboratory
about the 1st of Septombor, 1902. How long did you
remain tliore?

A. Until sometime the next spring.

Q. 6. What did you- then do?

A. I wont back to tho Edison Portland Cement
works as consulting engincor.

Q. 7. When you came back to the laboratory about
the first of September, 1902, did you lmvo ocoasion to
make any experiments on recording telephones 1

A. Yes, I worked at tryiug to produce a more sensi¬
tive transmitter tlmu was on the market nt that time,
tryiug to make au improved .transmitter.

Q. 8. How long did yon continue on that work ?

A. On that and other work that I carried on at tho
samo time, for about two months.

Q. ,9. 1 call your attention to a pieco of apparatus
(“ Edison’s Exhibit, Recording Telephone ’’) and ask if
you ever saw this lnnchiuo ?

A. I did, yes; Air. Edisou had that machine built
during either September or October, 1902, ut least
thou is when I first saw it.

Q. 10. Was that mnehiua completed at that time ?

A. Yes, sir.

Q. 11. Iu the same form ns it is now ?

A. Yes, sir.

Q. 12. Did you over see the machine operated ?

A. No.

Q.. 13. Did you ever examine this machine from tho
standpoint of an electrical ougineor ?

A. Yes, sir.

Q. 14. Is this machi
machine ? '

iu your opinion an operative

Q. 15. Are you familiar with the construction an
operation of tho olmlk rocoiver ?

A. Yes, sir.

Q. 1C. Hnvo you ever operated the clmlk receiver ?

A. Yes.

Q. 17. If tho nmchiuo before n» is of suoli median
cnl construction tlmt on tho turning of tho rnandri
the chalk roeoivor will slowly rotate, do you ontortai
any doubt if vibrations corresponding to Bound wave
aro received at the electrodo of the chalk receiver, tli
vibration set up and communicated thus to tho record
ing stylus would bo recorded on the phonograp
blank ?

Question objected to ns without snfBcion
foundation.

A. No, there could be no doubt about it.
CltOSS-EXAMINATION 1)1’ Mil. MaSSIP. :

x-Q. 18. Is it your understanding that the exhibi
concerning which you have testified, “ Edison’s Exhibil
Recording Telephone," iij at |iresent in such conditioi
that if connected with telephone wires in circuit am
having a blank cylinder on tho mandrel,' you couli
thereby record a record on that cylinder ?

A. (Witness examines the machine carefully). Yes

Uiianoe, N. J., (
Met pursuant to agreement.
Present— Counsel ns before.

than September 1, 1905, I • observed
inoter Boom of the Edison Lnborn
Apparatus which has been introduce
ion’s Exhibit, Bccordiug Telephone,
motor Boom wore a large number of
lommercial apparatus, representing
sou’s work ns an inventor. The o
was then iu tho same condition as il
is I could see, it appeared to bo c
md a perfect piece of apparatus. 1 1
ittention to the exhibit and asked
oid he informed me that it was a ri
or tho purpose of rucordiug telopho
lhonogrnph and that the invention
lonnection with railroad signaling.
io had not filod an application for
lovico and replied that lio had. I ii
10 application lias been filod to i
md I ever heard of the apparatus 1
isted that ho was right, and that tl
dice in New York would disclose tl
pon had n search made through tl
few York firm, Messrs. Dyer it
treot, but nothing was .found to
klison’s belief. Mr. Edison exnlain

F. L. Dyer.

Examiner's Certificate.

his attorneys, the matter may have boon overlooked. I
came to the Laboratory to take charge of Mr. Edison s •
work on April 1, 1903. For somo months prior to that
time Mr. Edison had ropontodly nrgod me to toko
okargo of liis work personally, as lie was dissatisfied
with having the work done in New York, and I finally
consented to do so.

The deposition of the witness is objected to
ns irrelevant and immaterial.

No oross-exnmination.

Signature and certificate waived.

I, Herbert W. Knight, a Master and Examiner in
Chancery in and for the State of Now Joisoy, and
Special Exatiiiuer by consent liorein, do hereby certify
that tho foregoing depositions of Ludwig F. Ott, John
F. Ott, Frank L. Dyer (2), Thomas A. Edison, Fred’k
P. Ott and William A. Warren, woro taken on behalf
of Thomas A. Edison in pursuance of the notice hereto
annexed boloro mo at tlio Edison Laboratory, West
Ornngo, New Jersey, on tho 24th day of July, 1900 ; on
tho 25th day of September, 190(1, and on tho 1st day of
October, 1900 ; that each of said witnesses was by mo
duly sworn before tho commencement of his testimony ;
that tho testimony of oach of snid witnesses was taken
8tenogmphically by mo by consent of counsel for both
parties and was then transcribed by mo on the type¬
writer, and that the opposing party was represented by
O. A. L. Mnssie, Esq. ; that said testimony was tnkon
at West Orange, New Jersey, and was commenced at
10:30 A. M. on the 24tli day of July, 1906 ; was con¬
tinued on tho 25th day of September, 1906, and was
concluded on tho 1st day of Octobor, 1906 ; thnt I nm
not connected by blood or marriage with either of snid
parties, nor interested directly or indirectly in tho mat¬
ter in controversy.

In testimony whereof I have lioronuto set my hand
at Noivnrk, Now Jersey, this eighth day of October,
1908. .

Herbert W. Knight,

Master and Examiner in Chancery.

Exhibits.

Pay Roll fbeek ending Oet. S, 1002
W. A. Warren 1 week... .

December 1003

Louis F. Ott week ending Dec. 17,
03-10 lira .

Edison's Exhibit Extracts Experiment
No. 1148.

RAILWAY TELEPHONE EXPERIMENT FOR BLOCK
SIGNALS.

July 1001 ‘

J. F. Ott, July 20, 1001 -1 Day . $4.10

Louis F. Ott

July 27-6 hours July 20-6 hours—

Total lire. 16 . . . 1.60

Invoice Edison M/g. Co.

8 Z. Cells Complete $10.00 Less 40% . 0.00

Invoice Edison Phonograph

12 ft No. 18 Cord .04|c. Yd .

2 Std. Phonos, less reproducers

. 4.00) Deld . . . .

2 Excelsior Slot Cabinets 4.10)

8/8 . . . .

Supply Co.

2 No. 18 Desk Telephones for

Magnet 0.00 . *. . 12.00

2 Fuller Standard Tcld battys

Comp. .76 . ...... 1.60

6 Ft. No. 8 Cirni Cord .12-40%. .80

2410 ohms Magneto Extension
Bells 1.25 . 2.00

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United States Patent Office.

EDISON

, . '• • I

MACDONALD.

BRIEF FOR

Interference

No. 25,677.

EDISON.

cion to practice can now be deprived o£ Iiib
le first inventor. Before discussing these
the respective inventions of the two parties
irst understood, because the nature of those
is such that. certain dootrines are believed
cable to one and not to the other. The two
are radically different and they have been
to interference only because the counts of
re drawn in extremely broad lahgnage.

operativeuess of two such well-known
if their operativeness lias uot boon
have taken the pains to do in this cose,
moss of a motograpli and of a pliono-
lually considered, ’ being conceded, the

Hleelncal Heine w (New
page 4, and The Tele -
al Jleview (London) of

graph reproducer is connected to tho lever D, so us tc
-vibrate the same, while, il it is desired to npplj
-the principle to a recording mucliiue, the diaphragm
B is dispensed with and the shoo L is connected
to a suitable phonographic .recorder. But, at the
date of the application for tho Highain Patent, April
25th, 1901., this principle had not been developed be-
joud tho domain of experiment.

Iu fact, it is stipulated in the case (M. K., pp. 38-35)
that on August 17, 1900, Higham filed an earlier appli-
catiou for patent, that " tho specification and drawings
thereof are substantially tho same as tho specification
and drawings of Higham’s U. S. Letters Patent No.
078,566,” and that on December 8, 1900, the Examiner
iu charge of the oaso requested that “ practical demon¬
stration of the operutioeiiees of the device be made bo-
fore the Examiner, if the alleged invention has boon
actually reduced, to practice.” This indicates very
clearly that even to so skilled a poison in the art as
tho Examiner, the.oporativoness of an amplifying frio-

Eihst, a complete reorganization of the friction pads,"
Second, making the friction wheel of amber, so as to
develop a high and very uniform friction,

J.mnD, grooving the friction wheel, and determining
the proper augle of tho groove to give' the desired re¬
sults, and

weighting the friction wheel uml allowing it
iy gravity in the bight formed by the friction
na to outomatienlly secure uniformity of fric-
' »>»y be Stated positively tlmt without these
ical changes, the Higlmm friction amplifying
vould never have pnssed out of tho realm of
int.

vor efforts Macdonald may have mndo, tbere-
.901, to perfect the Highaui apparatus would
ily be expected to be crude and the evidence
int this was so and that whatever wus doue
the nature of pure experiment. What
Id sought to do, and what ho describes
plication, is the making of a reproducing ma-
lnch the Higlmm amplifying devices ore applied
loplione. To this end the friction cylinder of the
Patent is mounted on the carriage of acranbo-
id the friction shn'n i„ . . P,,

The Office, however, believes that on interference d
exist betweeu these two forms of apparatus and
counts of the issue have been so drawn ns to npp
ently apply to the respective structures. Neither pa
has moved to dissolve.

Tho Issue.

An analysis of the several coun ts may be of value
determining just what it is that tho parties are hi
contending for. It is to ho observed in the first pli
that all tho counts definu the subject matter ombod
thereiu ns a “ phonic apparatus,” which the Office e
dently regards us broad enough to include a rocordi
telephone as well ns a tnlking machine.

Count 1. This count includes the following e

(1) A phonographic recording surface,
mao, dearly embodied in tho Edisou nppli
sro are grave doubts whether it is disclose
ient definition in the Mncdonnld npplicutio
parntns illustrated by Macdonald is a r
pnrntns, and although tlib application stnt
rention “ relates to machines for record
educing sounds ", it does not follow tint
action of a recording apparatus would
>m tho disclosure of the reproducing
ice with a reproducing apparatus the vil
3 stylus are amplified at the dinplirugm, t
md of a reproducing stylus, we mndo
wording stylus, and sounds were impresi
iphragra, the vibrations would bo obvioui
that thu results would be poorer thou if

re connected directly with the diaphragm

includes the spring or ole
oliine, whether the hitter
producing.

(3) A currier movable a
eludes the usual carriage
which the recording or re

(4) A phonograph stylti
ically limited to a “rec
used must noeessnrily be a
eproducing stylus. Macil
orfereuco does uot descrih
ug stylus, and there is u
ilacdonald that he over ex]
tylus, or made use of the i

(5) A friction wheel carri
lent is the cludlt cylinder

is comprehended by
ogrnpb. It will be
ider thnu the first in
mited to a recording
unit is limited to a
irfnce, but this elo-

lrei. Tins is the su
rfnco of both applic

idered above.

(3) A pliougrnph styl

friction wheel, considered above.

Iu his preliminary statement, tlie following dates are
alleged :

Conception in April, 1902 ;

Successful experiments for the purpose of demonstrat¬
ing the operativoiiess and utility of the invention in
April, 1902;

Sketches illustrating the invention iu April, 1902 ;

Explanation to others iu April, 1902 ;

Working drawings iu May, 1902 ;

Construction of full sized apparatus started May
31st, 1902 ;

Completion of said apparatus iu June, 1902 ;

Application filed September 16th, 1905.

These dates are all fully sustained by the testimony.
Edison states that “ the endeavor to produce a record¬
ing telephone arose from the desire on the part of
lome of the railroad telegraph superintendents, to have

Hussion ot messages from one to tlio other. With this
first apparatus a phonograph record was placed on .the
mandrel of the transmitting dovicos, the sounds there¬
from were delivered into a transmitting telephone, and
were then received by a receiving telephone and de¬
livered to a recording phonograph. , The date when
the first apparatus was constructed is substantially
fixed by the stipulated testimony of John F.
Bandolph (E. E., p. 23) from which it appoars that
the charges against the experiment were made be¬
tween J uly, 1901, and September, 1901. The itemized
statement for this experiment appears in the record
as “ Edison’s Exhibit Extracts Experiment No. 1148 ”
from which it appears that the two telephones used with
the apparatus wore purchased on August TO, 1901, and
that the two Standard phonographs used therewith
were purchased on August 29th, 1901. The witness.
Ludwig F. Ott, states that the experiments with' the
first apparatus wore made during oue of his summer
vacations from a school (E. »„ p. 7, Q. 4) and that he
left school in 1902 (E. B., p. 6, Q. 3). He is sure the
experiments wore made before ho left school (E. B., p.
9, Q. 15). No claim is made that the experiments
which were conducted in 1901 embodied the issue of
the interference. Those experiments were purely pre¬
liminary and were carried on for the purpose of ded
terminiug the feasibility of recording telephonic
messages by means of a phonograph. The experiments
were successful and it was then determined to reduce
the invention to practical commercial form. As a
matter of fact, in the first experiments in 1901 a
considerable improvement was made which is thus
described by the witness L. F. Ott—" At first I '

they do not disolose the issue, but they have been offered
merely to illnstrute the development of the invention
here involved. Mr. Edison’s attorney, however, states
that lie witnessed the operation of “ Edison’s Exhibit
Second Ohalk Receiver” on May 9th, 1902 (E. R., p.
27). It seems reasonably clear from the evi¬
dence, that tlio two chalk receivers and the paper ex¬
hibits relating to them, wore made in April or earlv in
May, 1902.

Edison’s Reduction to Practice.

mts with the “ Pi
iver ” and the two
rdiug of telephonic

sketches were explained to him bv Mr. Edison nt least '
ns early as May 29th, 1902, and possibly earlier (E.
B., 17, Q, 17). They roust linvo been received by Mr.
Ott sometime previous to May 29th, 1902, because on
that day, work on the complete machine wns started,
the order being known ns job No. 1283 (E. E., p. 19,
Q. 5B— E. E., p. 20, Q. 58). Tho book extracts relat¬
es to this work (Edison’s Exhibit Book Extracts)
have beeii offered in evidence (E. B., p. 50) from
which it appears that the' first work on the machine
was done during the week ending .Tnne 4tli, and tho
final work during tho week ending July 30th, 1902
Frederick P. Ott testified that he witnessed the con¬
struction of tho machino (E. E., p. -10, Q. 70), that it
wns built in the laboratory (Q. 71) anti that “ we
worked on it for a month I gness ” (Q. 74). His at¬
tention being called to the fact that the record books
show that he was employed on the work from June
4th, 1902, until June 30th, 1902, he states that the
machine wns constructed during that period (E. B. p
41, Q. 84). J. P. Ott states that the machine was
built '■ About May, 1902, as near ns I now remember ”
(E. B., p. 10, Q. 40). Mr. Edison says that the
machine was built some time in 1902 (E. B., p. 31
Q. 38). Warren testifies that bo left the Columbia
University in the spring of 1902, entered Mr.
Edison’s employ at that time, went to work
with the Edison ■ Portland Cement Company ns
electrical engineer, and returned to the Laboratory
about September 1st, 1902 (E. It., p. 44, Q. 8). On his
return to tho Laboratory either in September or Oc¬
tober, 1902, ho saw the completed machine (E. B. p
45, Qs. 9-10) which wns then in the same foim ns it is
“O''; T,1,e t08li,no“y l>y Edison ' makes it per¬

fectly clear, we think, that the exhibit •• Becordiug
Telephone was constructed in June, 1902, and cer¬
tainly before September or October of that year
Having constructed the iiompleto machine, a test
tWeof was not necessary in view of the preliminary
tests that had already been made. ' Edison had defer- '

therefore wns to
: the devices and
31), testifies, ns

ted all right."

?. P. Ott (E. E.

the challc receiver, the vibration sot np and
mmitnioated thus to the recording stylus would
recorded on the phonograph ?

" Question objected to ns without sufficient
indation.

" A. No ; there could be no doubt about it.”
on cross-examination (hi. 11., p. 50), Mr.

‘ x-Q. 18. Is it your understanding that the
liibit concerning which you have testified,
disou Exhibit, Kecordiug Telephone ', is at pres-
i in such condition that if connected with tele-
one wires in circuit and having a blank cylinder

raent must always tie presumed to Imvo been prepared
with the utmost care,' nml that no testimony can be
accepted materially at varinnco therewith. The state¬
ment says :

“ I conceived the invention specified in the
Bevernl counts of said interference in the latter
part of the yonr (December) 1900. I cannot fix
the date with grunter’procisiou. I discussed said
invention with others at that time and also during
the months of January and February, 1901. Dar¬
ing these months I gave . instructions for experi¬
mental work relating to this type of mnchino to
several of my laboratory assistants and many ex¬
periments (relating mainly to the frictiou devices)
were made during the first half of the year 1901.

I do not know whether any sketches were mode at
that time, my recollection being that I communi¬
cated my instructions orally. The first complete
machine embodying the invention was begun in
July, 1901, and completed nml tested in August of
that year. This was a reduction to practice, of the
said invention. No model, as distinguished from full-
sized machines, was made. 1 began immediately
(that is, in August, 1901) to construct a second
machine embodying the invention, and in
that connection mude sketches illustrating oertain
modifications which I desired to have embodied,
therein. This was followed by otbor machines,
each embodying some improvements over tlio pre¬
ceding constructions, but there being no material
change in respect of that part of the invention '
which is involved in this interference. AVork on
machines for the market began in the summer of
1901, and since that tiino a number of suoh
machines have beon manufactured and sold in the
regular course of business ” (M. R., pp. 1_2).

It will be observed from this statement that some
foots are alleged emphatically, and others with np-

parent hesitation. For instance, Macdonald is some¬
what uncertain us to the date of conception, but
ljelieves it was in December, 1900. Ho is perfectly
certain that during the first half of the year 1901, that
is, from January to June, ho was engaged in experi¬
menting particularly with the frictiou devices ; he is
not certain whether sketches wore made, but he
believes not. Ho is absolutely certain that the first
complete machine was begun in July, 1901, and fiuiBhcd
in August, 1901, and that by this maohino the inven¬
tion was roduued to practice. He is also certain that
•in August, 1901, ho began the construction of a socond
machine, which was followed by other muohiues aud
that work on maohiues for the market began in the
summer of 1901. Now, in the consideration of the
Macdonald case we are met with a very significant fnot.
lie does not prove the construction of the machine on which
he relies as reduction to practice ; he does not explain
why that machine is not produced, and he does not prove
the construction of the second machine that was
commenced in Auiju.il, 1901. On the contrary, we
find that Macdonald proofs are limited to experimental
apparatus constructed during the first half of the yeur
1901, os to which no claim of reduction to practice is
made and which, uccording both to the preliminary
statement and to Macdonald’s testimony, were aban¬
doned experiments. In other words, Macdonald’s
testimony shows that while ho may have conceived the
invention prior to Edison, he did not reduce it to
practice until long after Edison’s reduction to practice,
and he has made no. attempt to connect his conception
with his reduction to practice .by a Bhowiug of dili¬
gence, us is necessary under all the authorities.

Conception.

'Macdonnld states (M. R., p. 6, Q. 6) that the concep¬
tion of the invention was the result of the examination
of a machine which was shown to him by Daniel

mipany, about December 1, 1900,
or, states that lie did uot show tl
mild until ubout July, 1901 (]U
Q. 18, x-Q. 19). Macdonald’s d.i
erofore, not corroborated and can

the luaeluno and heard it operate before the maobin-
ists’ strike (Q. 20). Byrnes also sow the machine
operate before the strike, although ho iucorreotly fixes
the date in 1902 (M. 11., p. 21, x-Q. 25). Hinckley
saw the machine ubout September, 1901 (M. R.,
p. 22, Q. 4) and hoard it operate at that time.
It seems to bo established with reasonable cer-
tniuty, therefore, that this mnchine was constructed
and operated by Macdonald before the machin¬
ists’ strike in May, 1901, but it is oqually
clear that the machine was lit best merely an aband¬
oned experiment on which Macdonald can only roly for
conception and not a reduction to practice. The rea¬
sons for this conclusion will be briefly dismissed :

which was constructed
und which wub claimed
the said invention. If.

8 uotwceu the construction of tho
io nml Higlinm’s appearance is on- .
Under those circumstances, it in
' of lli© well-known rules in inter¬
lay oouohision can be readied
s award of priority should go to

t, priority mast clearly

mourning telephone, both as disclosed ii
us application and in the complete machine, is a re
m-ding apparatus and nothing else. The first count i
pocifically limited to a recording surface, and by nec
ssnry implication to a recording stylus. The exhibi
Recording Telephone" is „„ actual reduction t
ractice of the conut, and the Edison application ,
instructive reduction to practieo thereof. There is no
word of testimony by Macdonald that lie ever hod .
inception of n recording apparatus within the ternu
E this count before Edison's reduction to practice, sc
mt Edison stands in the position of the first to con¬
ave and the first to reduce to practice. Macdonald's
hole record may be searched in vain for a shred oi

stimony in support of this count. All, i„ fact, that

acdonald has o rely upon is the single, statement of
s application that the invention “ relates to machines
covdmg and reproducing sounds," but a recording
icliine is not specifically described, and it has been
anted out that to convert the reproducing machine
own therein to a recording machine, would be a diffi-
It accomplishment and would require independent

-fint inventor of a machine complying with tbo limits
tions of the first count, but us the only inventor, siuci
up to the present time Macdonald lias produced n<
evidence on which a claim to inventorship muy bi
based. The vague and general statement iu the speci¬
fication cuu indicate nothing more than a possibility
that tho machine might be modified so os to record
sounds. Certainly that statement is not sufficient tc
support a specific claim limited to recording mecliau-

Macdonald’s work in 1901 was purely

for three
completed by

no conception of a complete invention in 1001, unless
we ntlributo to Macdonald the gift of second-sight and
assume that in 1901 ho know what Higlmm would
bring forth in 1904.

In Menjunthuler vs. Scmlt/cr, 81 0. Q., 1417, the
Court of Appeids, defining the completeness of a con¬
ception of an invention, said :

" A complete conception its defined in tin issue
of priority of invention is matter of fact and must
ho dearly established by proof. Tho conception
of the invention consists in the complete perform¬
ance of tho mental part of the inventivo not. All
that remains to be accomplished in order to per¬
fect the act or instrument bolongs to the depart¬
ment of construction, not invention. It is, there¬
fore, the formation in tho mind of .the inventor of
n definite and permanent idea of the complete and
operative invention ns it is thereafter to ho applied:
in practice that constitutes an available concep¬
tion within the meaning of tho patent law (1 Rob.
on Pats., sec. 375).

They quote with approval tho following statement
from Cameron efi Everett vs. I. It. Brick, 1871 0. D.,

“ The point of time at which invention, in such
sonse as to merit tho protection of law, dates is-
neither when the first thought of it is conceived
nor when tho practical working machine is com¬
pleted, hut it is when tho thought or conception is
practically complete ; when it lins assumed such
shapo in the mind that it can bo described and il¬
lustrated ; when the inventor is reudy to instruct
the mechanic in relation to putting it in working
form ; when the •embryo’ 1ms taken some definite
form in the mind and seeks deliverance, and when ,
this is evidenced by such description or illustra¬
tion ns to demonstrate its completeness. * * «-

Tho true date of invention is at tho point where
tho work of the iuvontor censes and the work of
the mechanic begins. Up to that poiut he wns in¬
venting, but had not invented, and ho must linve
invented before the law will come to his protec-

8eo, also, Herman vs. 1< oilman, 107 0. G., 1094, and
hotter hand vs. I Jan son, 108 O. G., 799,

In this nspect of tho case, Edison is the first to con¬
ceive nud the first to rcduco to practice, and, therefore,
must prevail.

POINT 3.

Admitting that Macdonald's work in
1901 was a conception of the invention,
there is no showing of reasonable diligenoe
connecting that conception with the con¬
structive reduction to practice of Decem¬
ber 21, 1904.

•It lias been shown from Macdonald's own testimony
that during the three years between 1901 and June,
1904, absolutely nothing was done by him towards the
development of tho invention, hut that the early ex¬
periments wore still withhold as uncompleted. During
this period, Edison entered the Held, conceived tho in¬
vention, mado drawings of it, disclosed it to others and
completely reduced it to praotico. In this aspect of
the case, priority of invention must be awarded to
'Edison.

POINT 4.

In view of the positive declarations of
Macdonald's preliminary statement, his ex¬
perimental work, prior to May, 1901, can¬
not be regarded as a redaction to practice.
Furthermore, his admission that the early
machines were set aside as “ an uncom¬
pleted experiment ” mast outweigh any
testimony as to their success or operative-

The testimony must conform to the preliminnry
statement. If any other practice is permitted, a pre¬
liminary statement becomes a mere idle ceremony.
■When the preliminary statement says that experiments
-were made nt one period mid that the invention avus
reduced to practice at another period, the construction
of muohines during the first period and prior to the
second period, can only be regarded as part of the ex¬
perimental work, oven if Macdonald luid not specific¬
ally so characterized them. In Fowler vs. McBerty,
125 0. G., 1015, the Court of Appeals said :

“ When the Patent Office has refused to aliow
him to file nil amended statement, any attempt to
prove the earlier dates is contrary to the roles of
the Patent Office and to the general rules applica¬
ble to pleading in courts of law. Such testimony
must he dism/arded. Fowler pursued this course
and naturally even his testimony, which is within
the allegations of his preliminary statement, is
very closely scrutinized.’’

The fact that Macdonald 1ms not attempted to
amend his preliminary statement, does not in any way
affect the applicability of this doctrine. It would be
absurd to say that because ho has elected to stand on
his preliminary statement ns filed, ho should be per¬

mitted to disregard it, white, if ho had attempted to
amend the statement mid failed, ho would bo bound
by the dates originally allogod by him. Manifestly, if
Macdonald socks to give to tire testimony such a color
ns to support a claim for a reduotion to practice on his
experimental work of 1!)0I, that testimony must be
disregarded. If it is to bo regarded at all, it can only
bo ns evidence of conception, and on that point there
is grave doubt.

POINT 5.

Even if Macdonald's testimony can be
accepted in disregard of bis preliminary
statement, and if we overlook bis admission

that bis work of 1901 was an abandoned

experiment, the 1901 machine (Exhibit

No. 1) cannot be regarded as n reduction to
praotice.

Macdonald admits that it was not until 1904
when Higlium produced his improved friction device
thnt his innohiue hocumu practical enough to warrant
filing an applicatiou thereon. ‘Whatever may be the
construction of the machine nt the present time, with
the improved attachments, it is clear that in 1901 it
was not complete, nor was it so regarded by Mac¬
donald.

. In Sioiharl vs. Mauldin, 192 0. D., 137, the issue in¬
cluded a plunger, but contained no limitation as to the
material of wliiah it was to be made. Swihnrt con¬
structed twelve scales with plungers of hard rubber,
apd they. were shipped to customers, tried and re¬
turned, as they failed to weigh properly. “ After they
were .returned Swihnrt learned iudirectly from one

thereupon introduced this feature into his scales and
found that they were thou satisfactory j but this was
after Mauldin lmd obtained the same information from
Leganke and lmd successfully reduced the invention to
practice." Held, under those circumstances that the
machines as first constructed by Swihart woro not n
reduction to practice, but wore abandoned experiments.
The present cnso is very similar to Swihart vs.
Mauldin, because bore we have a completion of the in¬
vention by tlie suggestions of Higlinm, subsequently
to Edison’s reduction to practice. If Leganke had
never suggested to Swihart, or if Swihart had never
ascertained that the plungers could be made of
graphite, the twelve scales originally constructed
by Swilinrt would never have passed out of
the domain of abandoned experiments. So, in
the present cnso, if Highntn lmd nevor sug¬
gested to Macdonald how the friction devices
could bo made practical, Macdonald’s invention
would nevor liuvo boon reduced to practice.

In Gallagher Jr. vs. Him, 115 0. G. 1330, the Court
of Appeals, in dotining wlint constitutes reduction to

“ Nevertheless it.is essential that a device to
constitute a reduction to practice must show that
‘ The work of the inventor must be finished phys¬
ically ns well ns mentally, Nothing must be left
for the inventive genius of the public ' ”. (Robin¬
son on Patents, Yol. 1, page 183.)

In Macdonald, vs. Edison, 105 O. G. 973 (a prior

In Appleton’s Cyclopedia of Applied Mechanics (New
York; 1885) two forms of inotogiaph nre shown in fig¬
ures 4114 and 4110. The article describing the ihstru-
raent (page 862) says :

“ About «>o year 1872 Dr. T. A. Edison made
tho diseoverj’ that if a strip of paper, moistened
with a chemical solution that is readily decom¬
posed when a current of electricity is passed
through it, bo drawn ovaru metal plate connected'
with tho positive polo of a voltaic battery and be¬
neath a platinum stylo, bearing upon it with a
gentle pressure, and which can • be connected to
the negative polo bv means of a key or contaot
maker, whenever tho current is allowed to pass
tho friction is instantly reduced betweeli the

in juason vs. Hepburn, 84 0. G. 147, tlio Co
Appeals said :

" ^ _t*16 8nmo time, some devices are so s
and their operativoness and efficacy so ol
tliat tlio complete construction of one of i
• and form intondod for and cnpable of prt
uso.might well yet ho regarded as a sufficient i
tiou to practice without actual use or tost
effort to demonstrate their complete succe
probnblo commercial value.”

In Herman vs. Fullmun, 107 O. G. 1094, the pi
Commissioner of Patents said

“ ®io invention hero is a mere uttachme
automatically thrn out the light when it re
the bottom of the printing frnmo and is of si
character that it might almost bo said tl
practical test was not necessary to demom
its practicability”.

In Gallagher. Jr., vs. Ilien, supra, the Court sai

POINT 9.

Edison's prior reduction to practice in
1902, being established, did he by his
failure to file an application until 1905
lose his right to the invention in favor of

, . And, in the same case on appeal, 1002, 0. D. 521, the
Court of Appeals held that the factB were squarely
within the doctrine of Mason vs. Hepburn, and Bnid :

"The particular object of the beiieticence of the
patent law is the individual who first conceives,
and with diligence perfects an invention. And
where one has comnloted the not of invention his

coaled and suppressed, and second, that tho filn
the second application must bo stimulated by
grant of a patent to his opponent or in
commercial mnnnfucture on tlie part of
latter. In the present case, we have noi
of those features. In the first p
I ho testimony shows that it was Mr. Edison's ir
tiou to file an application for a patent and by the t
mony of his attorney ho is fully corroborated in tlii
tent. In tho second place Macdonald has no pa
and Edison wns not stimulated to file his appliet
ns a resnltof Macdonald's commercial operations,
Bololy because the mnehino was accidently discov
by his attorney, and when discovered thu applior
was immediately filed. Tho doctrine of Mason
Hepburn is in the nature of a forfeiture, and its lit
ness should only bo iuvolced in a clear case coi
absolutely within its spirit, if not its letter. Am
many cases arising siuco that decision, the Pu
Office and the Court of Appeals have refused to fo

IIS not then ills
j hail constructs!
tlie reduction ti

as would subordinate his right to tlmt of MoBerty, wh
promptly applied for and obtained a patent.

In Blaod vs. Jivcndn , 105, O. G., 496, Blood reduce
to practice in May, 1899, and Brown in the followin
month. Brown obtained his patent on February 2Gtl
1901, and Blood filed his application on April 27tl
1901. Hero was present apparently all the cirouii
stances of Mason vs. Hepburn, oxcept deliberate or in
iontional concealment. The Commissioner of Pntente
liowever, refused to follow tho doctrine of that ease
because the evidence showed that Blood had made lit
successful efforts to obtiiiu capital, whereby he migh
lie applications for his inventions. Bo far as the ab
Bence of intent to oouceal or suppress the invention i
lohcorhed, it is ns clear in the present ense as in Blooi
ra. Brown. ■ Blood made efforts to file an hpplicatioi
ind Edison believed he had filed an application.

In Brooks vs. Hillard, 106 O. &, 1237, Brooks re
luced to practice iu April, 1902, and filed Ibis origins
.pplicatioh two yenrs later oil April 26th, 1894, Hill

tion rebutted any presumption of abandonment or con¬
cealment and refused to follow Mason vs. Hepburn..

Bergger vs. Russel, 121 0. G., 2328, is another case
where the Court of Appeals refused to follow the doc¬
trine of Mason vs. ■ Hepburn. . The syllabus rends :

“ Where the reduction to practice of the inven¬
tion was clearly established, a dolny of two and a
hulf years in filiug the application therefor is not
sufficient to destroy the weight of proof of actual
reduction to practice, especially whore it appears
that drawings showing substantially the same
construction as the original device were sent to
applicant's attorney more than a year bofore the
application was filed and before any one else had
entered the field."

In Rolfe vs. Hoffman, supra, Hoffman’s Patent was
issued November 17th, 1903. Rolfe filed his applica¬
tion on December 29th, 1903, but reduced to practice in
December, 1901. Hero was presented a cuso which at
first glance would appear to come within the doctrine
of Mason vs. Hepburn, because there was a long delay
on the part of the junior .applicant, nftor his reduction
to practice, and a patent to his opponent had already
issued. Yet the Court again refused to apply the
doctrine of Mason vs. Hepburn, and said : .

“ There is absolutely nothing ill the record in
this case to warrant a finding of abandonment by
Rolfe. It appears that Rolfe after making those
exhibits, submitted them to his patent attorney,
with whom they were left to be patented in their
turn ; that the Amerioau Eloetrio Fuse Company
had the right to obtain patents for Rolfe’s invon-
. tious in the art to which the device in controversy
relates, and cxorcisod that right subsequent; to
December 1, 1901, to the. extent of filing about
twenty, applications ; that Rolfe talked more or

preserved the oxhibits. Those facts negative any
idoa of abandonment of the invention."

Not only do the facts in the present case’ show, we
think beyond any question, that there was no intent or
desire on Edison's part to suppress or conceal the in¬
vention, which is the first necessary consideration in a
case in which the doctrine of Mason vs. Hepburn is to
he applied, but it does not appear that Edison's appli¬
cation was filod ns n result of knowledge of Mncdonald's
application or of his commercial manufacture. It is
stipulated between the parties (M. R., p, 30, 32) that
the Macdonald application in this cuso was involved in
a former interference, declared April 26th, 1906, with
an application of one Piermnn, in which Edison’s
attorney was also attorney and in which Mr.
Edison was interested. Possibly, the nrgumeut will bo
made that this fact was the inciting enuse for the Edi¬
son application, but uo such inference can be drawn
under the oircnmstnncos, evon if it bo ndmitted that
the harsh doctrine of Mason vs. Hepburn could othor-
wise.be uppliad. Edison testifies, without qualification,
and he is fully corroborated by his attorney, that ho
had supposed tho application was filed, and when it
was found that it had not been, the oversight was im¬
mediately rectified. This was several months uftor the
Mncdonald-Piermnn interference was, declared. If
Edison had deliberately concealed or suppressed his
invention, tho human tiling to have done would have
been to file tho application when knowledge of tho
Macdonald application was first obtained, assuming
that Edison had personal knowledge of that fact,
although no proof ub to this point is offered. The
faot that Edison did.not file the application until the
machine was called to his attention by -liis attorney
negatives any possible presumption that the; hunting
cause was tho knowledge of Macdonald's application
or commercial work. We submit, therefore, ns a result
of this review of tho authorities, that the present case

1002, .tho application for patent
and Edison believed it bad
that ho was in error as
wliioh an adequate explatiati

February 18, 1907.
Ko. 35,677.

j U. S. PAYOT OFFICE, 1
I MAR 28 iao?

Ivi r-\.L.i-0.

0. C. 0.

UNITED STATES PATENT OFFICE.

Edison v. Macdonald.

Phonic Apparatus.

Application of ThoraaB A. Edition filed September 15, 1905, No. 378 ,649.
Application of Thomas H. Macdonald filed Deoember 31, 1904, No. 357, 857

Mr. Frank L. Dyer attorney for Edison.

Messrs. Mauro, Cameron, Lewis & Mansie attorneys for Macdonald.

The issue of this interference is an follows :

*n a Phonic apparatus, the combination of a nhono-
graphic recording surface, moans for rotating Bald surface*. a
aor?8? said surface, a Phonographic-Btylus and
t^snM Ga?rlsa by the °arrier, a friction member connected

1° +st^us arp Prennlng against the friotion wheel, and means
representatlye ot Bound vibrations for varying the friction between
said friction member and friotion wheel. mu^xon os-twoon

2* Jn a Phonic apparatus , the combination of a traveling
carriage, a friotion wheel and phonographic-stylus oarried thereby
a friction member preening on said wheel and connected to said *
ti v«Un-p driving said friotion whoel and means representa-

y.fbrnti°nB for varying the amount of friction be¬
tween the friotion member and friction wheel.

lr} a Phonic apparatus, the combination of a rotating
™*81* ! m°vabl° l°PEitudinally thereof, a phonographic-

t:L' ?,w^8?1x?arried by th0 carriage, a friction mem-
bor pressing on said friotion wheel and connected to said stylus
frlctioln0nhdriVlne neans for movlnK the carriage and rotating the

r* a Phonic apparatus, the combination of a rotating
ntviiin^nnrt ratable longitudinally thereof, a phonographlc-

“""hoel carried by the carriago, a friction mem-
I J”? n nald frlction wheel and connected to said stylus
common driving means for moving the carriage and rotating the frio-
ln^ rafa3?8 rHprosontativo of sound vibrationsBfor vary¬

ing oho friction between the friotion member and friction wheel

The invention v/hioh forms the subject-matter of the issue is
employed by the respective parties in structures which are specif¬
ically different. That described by Edison is a recording tole-
. phone, that by Haodonald a loud-spoaKing phonograph, Each of the
two devices, however, involves an amplifying means or means for
increasing the effect of the apparatus. As used by Edison, this
element is intended to ainplify the mechanical offeot of a tolo-
pliono receiving diaphragm so that the vibrations thereof may be
successfully recorded on a phonographic oyllndor. Macdonald employs
a somewhat similar amplifying device to magnify the effect of the
reproducing stylus of a phonograph on its diaphragm so as to cause
the same to act with greater force and intensity.

The amplifier of Edison is an oldor invention of his which
has become known an a chalk telephone or motograph. It consists
essentially of a constantly rotating friction wheel of'ohalk or
similar material moistened v/ith a oonduoting solution, and a fric¬
tion member consisting of a flat spring pressing against the ohalk
and connected to a diaphragm. The constant rotation of the chalk
draws on the spring, and this in turn strains the diaphragm. The
line ourrent is conducted through the chalk roller and friotion
spring. As the current flows therein the friotion is reduced,
the amount of this reduction varying with the strength of the cur¬
rent. As the current varies with the undulations produoed by the
transmitting instrument, the strain on the friction spring varies
likewise, and this permits the diaphragm to yiold and vibrate in
accordance with the variations in current.

Tho amplifying dovioo employed toy Macdonald conflicts of a eon-
ctantly rotating friction member, a friction toand arranged around
the came, ono end of the latter toeing attached to tho diaphragm
of tho phonograph and the other ond to tho reproducing ntylus.

An the friction dovioo in rotatad it tends to strain tho diaphragm,
and as the stylus paBsea in and out of the indentations of the
record, it varies tho strain on tho friction band, thereby varying
the pull on the diaphragm. The effect of this is to Increase or
amplify the vibrations of the diaphragm, compared with what they
otherwise would do.

The allegations of the parties as sot forth in their respect¬
ive preliminary statements are as follows :

Edison:

Conception . April, 1902;

Disclosure . « »

Drawings . « »

Model . Mono;

Deduction to practice . . Juno, 1903;

Macdonald:
December, 1900,

Hone.

August, 1901.

It in argued toy Edison that Macdonald cannot make count 1 of
tho issue, toooauso ho does not dlsolose a recording surfaoe, 1m t
has doscrltoed a machine which is only capable of reproducing a
previously made record. An examination of tho record of thin in¬
terference shows that Edison failed to maKe any motion to dlnooive
on the ground that Macdonald had no right to make this olaim, and
ho is therefore in no position to urge this question at tho present
time. Moreover, an examination of Macdonald's application shows
that ho states that his machine la adapted both for recording and
reproducing sounds.

Macdonald's application was filed December 31, 1904; that of
Edison, on September 15, 1905. The burden of proof is therefore

Won mi non.

Edison alleges conception of the Invention In 1903. Ho after¬
ward made nkotohos of tho dovioo and had a machine constructed,
which latter is In evidence or "Edison Exhibit Recording Telephone".
Tlio record clearly shows that thin was completed In tho summer of
the name year. Tills in tho machine depended upon by Edinon to
prove reduction to praotloe of his invention. It In urged, how¬
ever, by Macdonald that the evidence chows that tho machine v/as
never tested to see whether or not it would perform the functions
for which it was designed, and that therefore it can nerve him
no other purpose than an evidence of oonooptlon.

Prom Edinon' n ovm testimony it is dear that, the machine was
only tested to see whether it would work mechanically; that in, to
ascertain whether the chalk disk oould bo kopt in rotation by the
moohaninm designed for that purpose. Edinon nays (Qn. 89 and 40)
that it was simply tented to see whether tho mechanism was right,
and that it was run backward and forward for this purpose. There
is no evidence to show that it was ever tested to see whether it
would record speech. In faot it is admitted by Edison that it
never was so tented. He contends, however, that no such tost was
necessary. He states that lx>th tho ohalk receiver and the phono¬
graph were old and well known instruments and obviously operative.

Ho therefore argues that it was unnecessary to test the machine to
ascertain whether the combination of these elements would operate
in tho manner intended.

Edison' 8 view of the case cannot bo regarded as correct .

Such apparatus does not belong to that class of simple inventions
wliioli require no test to demonstrate their oporativenoss. As stat¬
ed by tho Court of Appeals of the District of Columbia in the ease

(

of Macdonald v. Edison, 105 O.G. , 1363, It, ip necessary for an
inventor to prove that his machine as constructed was capable of
successfully performing the work for which it wan intended.

Inasmuch as Edison failed to make this test, his na china cannot
bo regarded an a reduction to practice and can only nerve him as
evidence of conception.

After this machine was built in 1902, nothing further was done
by Edison until the filing of his application on September ir>, 1905.
In excuse for thin delay, Edison testifies that he thought an ap¬
plication had been filed, an he had given direction that the same
be prepared. Edison therefore in entitled to conception of the
invention in the year 1903 and to reduction to practice on Septem¬
ber is, 1905, the date on which he filed his application.

The record shows that the amplifying device employed by
Macdonald was not of this party's invention, it was originally
devised by Daniel Higham. Macdonald testifies that in December,
1900, Higham disclosed to him tho essential principle of his fric¬
tion amplifying device. The machine to which Higham had applied
his invention had a fixed reproducer, and this construction neoea-
sitated the mandrel being fed along beneath tho name. Macdonald
did not regard this as a practical construction and tho idea oc¬
curred to him of mounting the friotlon device so as to move in
conjunction with tho reproducing raochaninm of the regular phono¬
graph. He had the idea embodied in a machine which was completed
in the spring of 1901. He fixos the date as being prior to a
strike of tho machinists in his employ which ooourred about this
time. He remembers that tho machine was made before the strike.

Mile raaohine was full size and complete in every particular, and
was used during tho years 1901 and 1903 as an exhibition device.

The machine is in evidence as "Macdonald Exhibit 1, 1901 Machine",
and is now in working condition.

An to tho building of thin machine, Macdonald in fully corrob¬
orated by Prank H. Osborne, who testifies that ho naw tho inaohino
In tho early part of 1901; that it operated successfully at that
time, and that It in now in tho condition it then wan. He is fur¬
ther corroborated by 33. ft. Hymen, foreman of the laboratory of
tho American Graphophono Company, who stated that he naw the exhib¬
it when it wan in course of manufacture and naw it oporatod after
it wan completed.

Prom thin ovidonco it in dear that Macdonald has proved con¬
ception of tho invention at least as early an tho time thin machine
v/an completed. This being long prior to the date alleeed by Edison
in his preliminary statement as the date of his conception, it
must be held that Maodonald was tho first to conoelve tho Invention.

It in urged on behalf of Macdonald that tho 1901 machine con¬
stituted a reduction to practice of the invention. An examination
of tho testimony, howovor, falls to make it clear that Macdonald
regarded the mchine as a complete and perfected device. It is true
he testifies that it was used to demonstrate the practicability of
his ideas, tout he also testifies that the friction device was of
such a character that ho did not at that tine succeed in producing
a machine which lie considered commercial, and that "tho devices
were sot aside as an uncompleted experiment" (X-Q. 44). it was
only after Higliam in 1904 produced a greatly improved friotion
device that Macdonald saw the practicability of tho invention
and again took up the name with tho Intention of promoting it
commercially. In view of this testimony by Macdonald himself,
it is obvious that his 1901 machine can only be regarded as an
experimental device.

After Itigham had porfooted his construction Maodonald again '
took up tho matter, had drawings for a commercial machine made in-

November, 1904, and planed the device upon the market in December
of the Rame year. The exact time when theae latter machines wore
completed in not given, but tho time nppoara to havo boon prac¬
tically conourront with tho filing of hlR application, which took
place on December 31, 1904.

Macdonald having proved hitwolf to be the firnt to conceive
tho invention and the firnt to reduce tho invention to practice,
at leant oonntruotlvoly by filing hia application, mint bo regarded
an the prior inventor.

Judgment of priority of invention in awardod to Thomas H,
Macdonald, tho senior party.

Limit of appeal will oxpire April 17, 1907.

0. 0. Billings,

Examiner of Interferences.

March 38, 1907.

LEGAL DEPARTMENT RECORDS
PHONOGRAPH - CASE FILES

This material consists of correspondence, court documents, and other
items relating to infringement suits, contract disputes, and other legal actions
involving Edison's phonograph. Most of the selected items cover the years
1899-1910, but a few case files begin during the mid-1890s and some
continue into the 1910s. Approximately half of the cases relate to litigation
involving the National Phonograph Co. or other Edison interests and the
American Graphophone Co. or its associated sales company, the Columbia
Phonograph Co., General. Other cases deal with the disposition of litigation
between Edison and the New York Phonograph Co.; the supply of Edison
phonographs to Europe; patent infringement by Pathe Freres in France; and
Mexican copyright law. In addition, there is a case file containing information
concerning price maintenance litigation pursued by the National Phonograph
Co. and its affiliates. Closely related cases have been grouped in the same
folders.

American Graphophone Company v. National Phonograph Company
(Macdonald Patents 606,725 and 626,709)

This folder contains material pertaining to two suits brought by the American Graphophone
Co. against the National Phonograph Co. in the U.S. Circuit Court for the District of New Jersey.
The cases were initiated in March 1905, and each involved one of Thomas H. Macdonald's
patents on the composition of wax cylinders. The selected items consist primarily of letters to and
from Adolph Melzer, who conducted experiments on wax cylinders for Macdonald during the
1890s. Also included is a 1906 memorandum by Frank L. Dyer informing Edison about the
progress of the litigation, along with letters relating to the eventual settlement of the cases in June
1908.

American Graphophone Company v. National Phonograph Company and

Blackman Talking Machine Company

This folder contains material pertaining to the suit brought by the American Graphophone
Co. against the National Phonograph Co. and one of its agents, the Blackman Talking Machine
Co., in the U.S. Circuit Court for the Southern District of New York. The case was initiated in June
1909 and involved Richard B. Smith's U.S. Patent 881,831 on a reproducer swivel arm. The
selected documents consist of affidavits by Edison, William Pelzer, and Peter Weber, along with
three blueprints accompanying Edison's affidavit. Also included is an undated item, probably
written by Frank L. Dyer, comparing Smith's patent with reproducer patents issued to Edison and
John C. English.

American Graphophone Company v. Cleveland Walcutt et al.

This folder contains material pertaining to one of several suits brought by the American
Graphophone Co. against Cleveland Walcutt and his associates in the U.S. Circuit Court for the
Southern District of New York. The case was initiated in 1894 and involved U.S. Patents 341 ,214,
341,288, and 341,287 issued to Chichester A. Bell and Charles S. Tainter. Similar cases were
initiated in 1897 and 1898. The selected items consist of the index and affidavits by Edison,
George E. Tewksbury, and Cleveland Walcutt from a volume entitled Defendants' Papers in
Opposition to Motion for Preliminary Injunction.

Columbia Phonograph Company v.

National Phonograph Company and William J. Rahley

Columbia Phonograph Company v.

John E. Whitson and Walter J. Whitson and the National Phonograph Company

This folder contains material pertaining to two suits brought by the Columbia Phonograph
Co. against the National Phonograph Co. and two of its agents, William J. Rahley of Baltimore and
Whitson Brothers of Washington, D.C. The Rahley case was heard in the U.S. Circuit Court for
the District of Maryland; the Whitson case, in the Supreme Court of the District of Columbia. Both
cases were initiated in April 1901 and involved territoijal sales rights. The selected items include
the bill of complaint and a summary of docket entries for the Rahley case, along with
correspondence regarding the progress of litigation in both suits.

Thomas A. Edison v. Frederic M. Prescott

This folder contains material pertaining to the suit brought by Edison against Frederic M.
Prescott in the New Jersey Court of Chancery. The case was initiated in June 1899 and involved
Prescott's misrepresentation of himself as Edison's agent. It was a companion suit to Edison
Phonograph Company v. Frederic M. Prescott, which involved infringement of Edison’s U.S.
Patents 386,974 and 393,466. The selected items include Edison's bill of complaint; Prescott's
answer, which bears Edison's marginalia; an affidavit by Edison; and correspondence regarding
the suit.

Thomas A. Edison et at. v. New York Phonograph Company et al.

New York Phonograph Company v. Slegel-Cooper Company

This folder contains material pertaining to the suit brought by Edison, the National
Phonograph Co., the Edison Phonograph Works, the Edison Phonograph Co., and Frank L. Dyer
against the New York Phonograph Co., James L. Andem, and others in the New York Supreme
Court for the County of Westchester. The case was initiated in December 1909 and involved a
dispute over the settlement reached in New York Phonograph Company v. National Phonograph
Company et al. , executed on April 9, 1 909. The selected items consist of the bill of complaint and
the two contracts of settlement in dispute. Also included is Frank L. Dyer's deposition in another
case, New York Phonograph Company v. Siegel-Cooper Company, initiated in April 1909 in the
New York Supreme Court for the County of Westchester, which discusses the protracted litigation
between the New York Phonograph Co. interests and the Edison interests.

Thomas A. Edison, Inc. v. United States Phonograph Company

This folder contains material pertaining to the suit brought by Thomas A. Edison, Inc.,
against the United States Phonograph Co. in the U.S. Circuit Court for the Southern District of
New York. The case was initiated in June 191 1 and involved Edison's U.S. Patent 964,221 on a
200-thread record. The selected items consist of the bill of complaint, along with testimony by
Walter H. Miller and George B. Redfeam regarding early technical and commercial
experimentation with 200-thread records. Miller's and Redfeam's testimonies were entered into
evidence in two companion suits against the United States Phonograph Co., which involved
Edison's reissued patent on a button-ball stylus (U.S. Patent Reissue 1 1 ,857) and Peter Weber's
reissued patent (U.S. Patent Reissue 13,120) on a four-minute stylus.

Edison Phonograph Works v. Edison United Phonograph Company

Edison United Phonograph Company v. Edison Phonograph Works

This folder contains material pertaining to the suit and countersuit brought by the Edison
Phonograph Works and the Edison United Phonograph Co. in the New Jersey Court of Chancery.

The cases were initiated in 1901 and involved the solvency and holdings of the Edison United
Phonograph Co. and the contractual relations between the two companies. The selected items
include the bill of complaint by the Edison Phonograph Works; a 12-page draft in Edison's hand
and other correspondence regarding the suit; and the bill of complaint and defendant’s affidavit

Edison United Phonograph Company v. Thomas A. Edison et at.

This folder contains material pertaining to the suit brought by the Edison United
Phonograph Co. against Edison, trading under the name of Edison Manufacturing Co., and the
Edison Phonograph Works in the New Jersey Court of Chancery. The case was initiated in May
1895 and involved a dispute over foreign sales rights for phonographs. The item at issue was
Edison's "kineto-phonograph" — a phonograph attached to a peephole kinetoscope. The selected
documents consist of the bill of complaint, an affidavit by Theodore Seligman forthe complainant,
and affidavits by Edison and Henry Morton forthe defense.

Jos6 Elizondo et al. v. Jorge Alcalde

This folder contains material pertaining to the suit brought by Jos6 F. Elizondo, Luis G.
Jorda, and Rafael Medina against Jorge A. Alcalde in Mexico. The case was initiated in 1906 and
involved alleged copyright violations by Alcalde, an agent of the Mexican National Phonograph
Co. The selected items consist of letters concerning the case, along with correspondence between
attorneys representing the National Phonograph Co., the Victor Talking Machine Co. and the
Columbia Phonograph Co. regarding musical copyright in Mexico. Also selected is a copy of the
court decision in a related case involving Elizondo and S. V. Schmill, an agent of the VictorTalking
Machine Co. in Mexico.

International Graphophone Company v. Thomas A. Edison et al.

This folder contains material pertaining to the suit brought by the International
Graphophone Co. against Edison, John F. Randolph, William E. Gilmore, the National
Phonograph Co., the Edison Phonograph Works, and the Edison Manufacturing Co. in the New
Jersey Court of Chancery. The case was initiated in January 1905 and involved the contractual
and financial responsibilities of the Edison Phonograph Works, in which the International
Graphophone Co. possessed stock. The selected items consist of the bill of complaint, Edison's
answer, and a letter by Frank L. Dyer regarding the progress of litigation.

George Croyden Marks v. Paths FrSres

This folder contains material pertaining to the suit brought in France by George Croyden
Marks against Pathe Freres (Compagnie Generate des Phonographes, Cinematographies et
Appareils de Precision). The case was initiated in 1904 and involved the patents of Fernand
Desbriere on molded records. It was a companion suit to Compagnie Frangaise du Phonographs
Edison v. Path6 FrSres. The selected items consist of correspondence from the period 1 908-1 91 0
concerning attempts to settle the litigation.

National Phonograph Company v. American Graphophone Company
(Miller and Aylsworth Patent 683,615)

National Phonograph Company v. American Graphophone Company
(Miller and Aylsworth Patent 683,676)

New Jersey Patent Company v. American Graphophone Company
(Joyce Patent 831,668)

This folder contains material pertaining to three suits brought against the American
Graphophone Co. in the U.S. Circuit Court for the Southern District of West Virginia. The first two
suits were initiated by the National Phonograph Co. in June 1905; the third by the New Jersey
Patent Co. in November 1906. The cases involved three patents on methods of duplicating
phonograph records— Walter H. Miller's and Jonas W. Aylsworth’s U.S. Patents 683,615 and
683,676 and Maurice Joyce's U.S. Patent 831,668. The cases were consolidated by stipulation
in January 1908 and dismissed with costs to the defendant in December 1910. The selected
documents include correspondence by Frank L. Dyer and Herbert H. Dyke of the Legal
Department and Philip Mauro and C. A. L. Massie, attorneys for the defendant, pertaining to the
progress of litigation. Also included are the following items from the printed record of the
consolidated case: index; complainant's brief in support of a motion to.suppress the deposition
of Mauro; defendant's brief in opposition to the motion; defendant's proofs; and complainant's
rebuttal proofs.

National Phonograph Company v. American Graphophone Company and Columbia
Phonograph Company, General
(Edison Patent 454,941)

National Phonograph Company v. American Graphophone Company and Columbia
Phonograph Company, General
(proposed suit)

National Phonograph Company v. American Graphophone Company and Columbia
Phonograph Company, General
(Edison Patents 397,280 and 430,278)

This folder contains material pertaining to three suits brought or considered by the National
Phonograph Co. against the American Graphophone Co. and its sales company, the Columbia
Phonograph Co., General. The first case was initiated during January 1903 in the U.S. Circuit
Court for the Southern District of New York and involved Edison U.S. Patent 454,941 on a built-up
diaphragm. The selected items consist of correspondence and memoranda pertaining to Edison's
deposition in the case. The second suit was considered by Edison and his attorneys during August
1904 and involved charges of unfair competition. The selected items consist of correspondence
and the proposed bill of complaint. The third case was initiated during October 1904 in the U.S.
Circuit Court for the District of Connecticut and involved Edison's U.S. Patents 397,280 and
430,278 on a floating-weight reproducer. The selected items consist of the bill of complaint and
Edison's affidavit.

National Phonograph Company v. Lambert Company

This folder contains material pertaining to the suit brought by the National Phonograph Co.
against the Lambert Co. in the U.S. Circuit Court for the Northern District of Illinois. The case was
initiated in December 1902 and involved Edison's U.S. Patent 713,209 on molding records. The
selected items consist of correspondence regarding the progress of litigation; a report by Walter
H. Miller on a visit to the Lambert factory in Chicago; and portions of the National Phonograph
Co.'s brief on appeal to the U.S. Circuit Court of Appeals.

National Phonograph Company v. Lambert Company and Thomas B. Lambert
(Edison Patent 414,761)

Edison Phonograph Company v. Lambert Company and Thomas B. Lambert
(Edison Patents 382,418 and 382,462)

This folder contains material pertaining to two suits brought by the National Phonograph
Co. and the Edison Phonograph Co. against the Lambert Co. and Thomas B. Lambert in the U.S.
Circuit Court for the Northern District of Illinois, Northern Division. The cases were both initiated
in December 1900 and involved Edison's U.S. Patents 414,761, 382,418, and 382,462 on
phonograph record blanks. Together, these cases were also known as the "tapered bore case."
The selected items consist of the following portions of the complainant’s printed record: index, bills
of complaint, and testimony of Edison.

New Jersey Patent Company v. Columbia Phonograph Company, General

This folder contains material pertaining to the suit brought by the Edison interests against
the Columbia Phonograph Co., General, in the U.S. Circuit Court for the District of New Jersey.
The case was initiated in April 1905 and involved Jonas W. Aylsworth's U.S. Patent 782,375 on
record blank composition. The case, also known as the "camauba wax case," was settled'in June
1908, along with the American Graphophone Company v. National Phonograph Company cases
("Macdonald composition cases") heard in the same court. The selected items consist of the
following portions of the printed record: index, bill of complaint, and testimonies of Edison and
Aylsworth.

New York Phonograph Company v. National Phonograph Company et al.

This folder contains material pertaining to the suit brought by the New York Phonograph
Co. against the National Phonograph Co., Edison, the Edison Phonograph Co., and the Edison
Phonograph Works in the U.S. Circuit Court for the Southern District of New York. The case was
initiated in January 1901 and involved territorial sales rights. The selected items consist of
correspondence from the period 1900-1905 regarding the context and progress of the litigation.

United States of America v. James L. Andem

This folder contains material pertaining to the criminal suit brought against James L.
Andem in the U.S. District Court for the District of New Jersey. The case involved Andem's alleged
forgery in representing himself as the secretary of the New England Phonograph Co. in May 1 905.
He was found not guilty in May 1908. The selected items consist of letters and other documents
from 1907 and 1908 concerning the context and progress of the litigation.

United States of America on the Relation of National Phonograph Company v.

Frederick I. Allen, Commissioner of Patents

This folder contains material pertaining to public use proceedings and subsequent litigation
brought by the National Phonograph Co. in the U.S. Patent Office, Supreme Court of the District
of Columbia, and Court of Appeals of the District of Columbia. The proceedings were initiated in
May 1899 and involved Edison's attempt to block applications by Leon F. Douglass and Thomas
H. Macdonald for patents on a larger-diameter record with a high surface speed. The selected
items consist of the following portions of the printed record on appeal: index, petition for
mandamus, petition for public use proceedings, and affidavits of Edison and William E. Gilmore.

Price Maintenance Cases

This folder contains a volume entitled Litigation in Enforcement of System Under Which
Edison Phonographs and Records Are Sold, published by Thomas A. Edison, Inc., in April 1911.
Included are printed copies of injunctions and decrees arising from price maintenance suits
brought against sales agents of the National Phonograph Co. and other parties engaged in cutting
prices of Edison products. Only the index, introduction, and six lists of cases have been selected.

Legal Department Records
Phonograph - Case Files

American Graphophone Company v. National Phonograph Company
(Macdonald Patents 606,725 and 626,709)

This folder contains material pertaining to two suits brought by the
American Graphophone Co. against the National Phonograph Co. in the U.S.
Circuit Court for the District of New Jersey. The cases were initiated in March
1905, and each involved one of Thomas H. Macdonald's patents on the
composition of wax cylinders. The selected items consist primarily of letters to
and from Adolph Melzer, who conducted experiments on wax cylinders for
Macdonald during the 1890s. Also included is a 1906 memorandum by Frank
L. Dyer informing Edison about the progress of the litigation, along with letters
relating to the eventual settlement of the cases in June 1908. Portions of the
court record for these two cases appear in Thomas A. Edison Papers: A
Selective Microfilm Edition, Part III, 116:478-117:269.

May 22, 1905.

A. Melzer, Esq,,

Evansville , Indianng.

My dear Sirs-

We have had some correspondence in the past
relating to phonograph matters, and I also have pleasant
reoolleotions of my interview with you. 1 would like to
count on your friendly assistance in a matter which I think
should he thoroughly ventilated and exposed. As you know,
phonograph cylinders and blanks are formed essentially of
stearate of soda, stearate of aluminum and oereBin, the mix¬
ing being carried at at a high temperature - about 450 degrees
E., and the aluminum being added in metallic form to the
caustic solution before the addition of the latter to the
stearic aoid. These cylinders and blanks have been made and
sold continuously by me sinoe prior to the year 1890. In the
early days, the Graphophone Company either made use of a
stearate of lead composition, or else bought old Edison blanks,
melted them VP and re-molded them. They were very anxious to
get hold of my formula, and I understand, hired some of my men
away for this purpose. In November, 1896, Mr, Maodonald filed

A. Melzer, Esq. - 2.

an application on my formula, but he did not describe the use
of a high temperature, which he was probably unfamiliar with.
This patent was granted July 5th, 1898, numbered 606,725. On
August 23ip 1898, Maodonald filed a second application, des¬
cribing the use of a high temperature, and also, mentioning my
formula, and this patent was granted June 13th, 1899, numbered
626,709. In other words, Maodonald obtained two patents, des¬
cribing the wax composition which 1 had been publicly using
continuously for more than nine years. I did not know of the
existence of these patents until several yearB after their
issue.

It seems almost inconceivable, but notwithstanding
jrhis situation, the Graphophone Company have sued my oonoern
for infringing these patents. I understood from my talk with
you that you were more or less familiar with thiB situation,
and that, in fact, the Graphophone Company had requested you
to analyze my composition, and advise them as to the waj to
make it. I would like, therefore, to have you testify in my
behalf, in order that the truth may be disclosed. This testi¬
mony could be taken at Evansville, so as not to seriously in¬
convenience you, Eirst of all, however, I would like to have
my attorney meet you and talk over the situation. He oan go
to Evansville at any convenient date, but I would like to have
the matter attended to promptly. If you will wire me on re¬
ceipt of this, and advise me whether I oan count on your as¬
sistance, I will be very much obliged,

YourB very truly,

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Adolph Melzer, Esq.,

Evansville, Indianh.

My dear Mr. Melzer:-

1 was sorry to receive your letter of
the 14th inst., because 1 think that you have misjudged both
Mr. Edison and myself. So far as 1 am personally-concerned,
you will recall that when I suggested that you should give us
copies of extracts from your note book, 1 was particularly
anxious not to Impose on your good nature and asked you several
times whether we ware not making too much of a request of you.

1 saw that the copying of these extracts would be a laborious
job, but you seemed to be so entirely cheerful over the pros¬
pect of night work that i did not know that you looked upon it
as a task, but rather as something that appealed to you as a
pleasant occupation. Now that I understand the situation, I
cannot, of course, complain of your decision, although I am
sorry to have you put my request in the same category as the
other cases you mention, where your good nature was undoubtedly
imposed upon. If you will let me know what you think we should
pay for your tims in copying these notes, X will send you a

No. 2 - Adolph Melzer, Esq.

check for the same; or, if you cannot spare the time to do
this I am willing to pay a typewriter for making such copies.

At any rate, 1 hope you will not now refuse to let me have the
copies of the notes, because that would put me in an embarrass¬
ing position,' as I have told Mr. Edison that you had promised
to let me have them.

So far as Mr. Edison iB concerned, of course you will
understand that he cannot be judged by the same standards as
other men. He does the work of four or five ordinary men, and
I know that his mind is simply overburdened with harassing and
wearing problems. If he confined himself to his scientific
and inventive work, he would have more time to devote to per¬
sonal and social matters, but in addition to his ejgperimental
work and the running of his laboratory, he mikes it a point to
keep in touch with the multifarious and perglexing questions of
business that daily arise in connection with his many commercing,
interests; Under these circumstances, he mu3t necessarily leavf^
the handling of details to his assistants, and his correspondence
therefore is generally carried on by secretaries under his di¬
rection. You must not feel for a moment that there is any lack
ofi' appreciation on his part of his indebtedness, to you in this
matter, and I know that he is grateful for yqur' kind efforts to
assist him. I have suggested to him that he should write to
you himBelf , making this point clear, but I haye: not jfc old him
of your letter to me, and I think he would ,be-?deeply hurt if '

No. 3 - Adolph Melzer.

he felt that you believed for a moment that he had any inten¬
tion of imposing upon you or of taking an advantage of your
good nature.

You refer to the fact that Mr. Edison would not acoept
your big cylinder as a gift. It seems to me that his position
in not accepting the same, because as he frankly explained to
you, he could not use it, was certainly more ingenuous than
would be shown by most people, who might take it without any
thought whatever of using it. He certainly had no idea that
you would be offended by perfect frankness on hiB part. So
far as concerns your order for fifty concert records, that is
a matter that he knew nothing whatever about, and he does not
know to this day that such a request was ever made by you. If
he had, I am sure that he would have at least tried to have the
order filled if it were possible.

I hope that you will take this letter in the. right
spirit, as I think that your position is wrong and that you
should be put right. My visit to Evansville was a very pleasant;
one, and I enjoyed meeting you very much indeed, and can only
hope that the same frankness and good nature may characterize
our correspondence that marked our personal intercourse.

Please accept my best thanks for the excellent pic¬
ture of Macduff. Give him my regards, and believe me always -
Faithfully yours,

eld/ahk.

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Telephone White

CHARLES MELZER

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Adolph Melzer, Esq, ,

6701 East Colfax Ave . ,

Montclair, Colo.

My daar Sir:-

Your favor of the 14th inst, was duly re¬
ceived, and I ain extremely sorry to hear of the unfavorable
condition ^mnvhich you found your brother.

Regarding the several composition suits, there are
no new developments, but if anything occurs of interest I will
let you know. Permit me, however, to call your attention to
one misstatement made by Mr. Macdonald to you. The aggression
came entirely from the other side. Vfe were notified that we
were infringing the Macdonald patents, and 1 replied by stating
that they were infringing the Aylsworth patents. The Buit
against us by the Graphophone people was filed before our suit
against them, 30 much for Macdonald' s claim that we are the
aggressors .

Mr. Edison sends his best wishes in which 1 join, and

ELD/AKC.

Yours vary truly,

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MELZER BROSEs

Nov. 15,1905.

A. Melzer, Esq.,

Evansville, Indiana.

Dear Mr. Melzer:-

Your letters of the 11th and 12th insts.
have been received. So long as the problem of legible speech
is not impossible, although v/e may admit it is very difficult,

1 do not see why you should give it up because others have failed.
Whenever any accomplishment is made in the line of invention,
it generally follows unsuccessful experiments by otherB in other
directions. New minds coming into the field and uninfluenced
by previous experience, frequently hit upon expedient that
bring,', success. Eor instance, 1 have vary little doubt but that
the next great advance in the phonograph will b8 made by soma one
other than Mr. Edison, because, they will start in new lines,
while Mr. Edison's enormous experience will really stand in his
way.

Regarding: the Phono Cards, 1 do not see very well
how the idea of individual disc records can be worked out. All
disc records are duplicates made in soma hard material from a

Ho. 2 - A. Melzer, Esq.

wax master, and the master |s so fragile that it cannot he test¬
ed, so that as a result a matrix has to he made from each master.
The great advantage of phonograph duplicates is that the masters
can be tested, and if there are any flaws they can he discarded
before any additional expanse is incurred. Therefore, in order
to make the phono card with an individual racord, the material
will have to he some soft substance in which a zig-zag record
can he out, and that would necessarily prevent even its immedl-
ata duplication, and certainly its transmission through the mails
Regarding your improvement in the phonograph line,
it seems to me that under the circumstances, it might be well
for you to file a caveat in the Patent Office d'eshrihingtyour-
invention. This would protect you for one year and the cost is
nominal. The Commissioner of Patents at Washington will send
you a copy of the rules of practice on request, giving you full
information as to forms, etc. The idea of a caveat is to pro¬
tect a man during the period of his experimenting, and this
seems to he your position. We can talk over this matter when
I Bee you in Evansville. On this point, 1 am glad to hear that
you v/ill give j.u^: your testimony, and I will arrange to subpoena
you.' Would it be convenient for you to do this the latter part
of this month, or early in December? 1 wish also that you would
give me the full name and address of Ur. Wartmann, in order that
1 can prepare the necessary notices. When I go to Evansville ,

No. 3 - A. Malzer, Esq..

I will try to gat Mr. Edison to go v/ith ma , although I am
afraid that ha will not go. As you know, ha is pretty wall
wadded t.o tyis Laboratory, and it is one of the most difficult
things in the world to d*?ag him away from his work.

With kind regards, 1 am -
, Yours very truly,

PI, D/ARK.

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^•fy-*XXi

'S ~?<7

Dec. 16,1905.

A. Melzer, Esq.,

Evansville , Indi ana .

Dear Sir:-

Your favors of the 10th and 11th insts. have
been received, and I have ordered and will read with interest
the Scientific American Supplement of December 2, containing
the article referred to.

On the subject of legible speech, 1 see no hope for
the solution of the problem by anything analogous to a phono¬
graph or gramophone record, owing to the difficulties to which
you refer, and particularly the great length of the spoken
wo.^rds . The problem will only be solved in my judgment when
some radically new djBooverieB are made in connection with
.! sound waves. After all, co|ld anything be better than the
'''Phonograph , which repeats the words audibly and does not require
special education to decipher them?

Regarding your scheme to impress phonograph records
on cakes of toilet soap, would there not be |onsiderable diffi¬
culty, due to the hygroscopio nature of these soapB? It seems

A. Melzer, Bsq. - 2.

to me that ths scheme, if it oould he worked out praotioally,
would appeal more as an advertising novelty to a soap manu¬
facturer than to a talking machine manufacturer. The soap
manufacturer would, no doubt, ha able to sell more soap if the
soheme was extensively advertised, hut the talking machine
manufacturer is more interested in improving the quality and
permanenoe of his reoords.

In aooordanca with your request, I am sanding you
today a phonograph raoord mold, with which you oan make some
experiments. I suggest that you have a core made so as to
pour in the soap between the core and the mold. Care should
he taken not to have any air hubbies, and this can he dona
by keeping the mold hot. |ntil the molten mas3 is entirely
liniped.

I shall he interested to hear what success you may
have *with your experiments.

' Yours very truly,

P1D/AEK.

Melzet Irntlfpro

Snail filrlurrm

Eliaiwhillr, 3)iiJi. Jan. 5, 1906.

Prank L, Dyer, Esq.,

Orange, N. J.

My dear Sir: —

Your favor of the 2d inst. to hand and have read the contents
with much interest. Your direction how to make a disc of the metal
cylinder, you sent me, I will not follow, believing the result of such
an experiment would not compensate for the time spent. I will drop for
the present, the cake of soap that sings, as well as the legible speech.

The Neophone records as described in your letter., are made
and reproduced same ■ as the Toy graphophone records. X will send you my
Toy graphophone, for which X no longer have any use. You may not have
one in your collection of talking machines.

Now, as to the contents of the second page of your letter ,
would say, the mode of operating in making your cylinder composition
was quite a surprise to me, and I would give much if my poor brother
was still among the living and could explain to you the correct princi¬
ples to be observed. As a soap maker and. Soap chemist he had no superior
and I was much pleased, when he, after hearing of your difficulty with
Macdonald, took new interest in phonograph cylinders and expressed his
intention to make some experiments with me when I would come to visit
him the past summer. Alas, it was not to be.

To say the least, it is very impractical to dissolve Acetate
of Aluminum in Caustic Soda Solution, to produce Aluminate of Soda; to
decompose Stearate of Soda with a solution of Alum, to make Stearate of
Aluminum; or to employ metallic Aluminum^particularly the high priced
powderjin place of the hydroxide or hydrate, which is the only correct

Mtlzev Irntlfpra

EUtmnliillr, 3Jnh.

form. If, what you say in your letter, is brought out in court, and
your opponents are posted on chemical reactions, as they should be, they
will make fun of you. What would you think of a Soapmaker who saponified
his tallow with the metal Sodium, or attempted to saponify it with the
Acetate or Sulphate of Soda? The hydrate (Caustic Soda) is the only
proper form, unless he uses fatty acids in place of the glycerides, in
which case he could use either the hydrate or carbonate. In the case
of aluminium, we hare no carbonate. When ten years ago I started on the
cylinder composition and made a couple of lots with Oxide of Lead which
proved unsatisfactory, brother or myself suggested aluminum; my brother
did not hesitate a minute about the form. "Dissolve the hydrate in

Caustic lye", he said, and as I could find no hydrate Al. in the labora¬

tory, he told me to dissolve Alum in water, precipitate the Alumina with
Carb. Soda solution, wash the precipitate repeatedly and dry at moderate
temperature. Enclosed is a sample of that hydrate of Al. made ten yearB
ago and of which there is a pound or so left in our laboratory.

When my brother made analysis of "Composition X" , several
months after making cylinder Composition with Alumina, he was much
puzzled over the large amount of Sulphuric Acid it contained and then

made a second analysis with same results. He could not make the Sul¬

phuric Acid and Alumina found, correspond to any form of Al. Salt, but
had he seen your letter while living, he would have discovered solution
of the puzzle at once in the Sulphuric Acid you introduced in the form
of Alum Solution.

As to the results obtained by one and the other process, there
is certainly a difference, and a very considerable percentage of Acetic

fflelzex Irntlffra

Eliannliillf, 3lu6.

or Sulphuric Acid in the composition is surely not desirable. X believe
Macdonald claims the Hydrate and Metallic Al. as his improvement; you
can prove that you used Aluminum Salts and Aluminum Bronze-powder before
his patent. As to the legal merits, I am not competent to give an
opinion, but if the Court gives him the sole right to the Hydrate and
gives you the right to the Aluminum Salts and the metal . you will both
be alright.

Very respectfully,

Melset Srntljprfl

Snap iHamifurlumii

Eimnabillr. 3Jnb.

Jan. 5, 1006.

Frank L. Dyer, Eaq.f

Orange, N. J.

My dear Sir: —

Ab per my letter of this date X have sent you, by expreee, the
Toy graphophone aleo the phonograph parte X ordered Bhortly before your
visit to our oity, for converting my concert machine to standard cylinder
size. Mr. Edison having kindly presented me with a Triumph machine, X
have changed my old machine baok to the oonoert size and now have no
use for the parts, which together with the Toy graphophone, please
accept with my compliments. However, I will let you "pay the freight"
on the same.

-Very respeotfully,

Jan. 11, 1906.

A. Melaor, Ssq. ,

Evansville, Ind.

My dear Sir: —

Thank you very much for your letters of the
5th inst. accompanying the toy graphophone, which I shall add
to my collection of phonograph relics.

I Bhowed your letter to Mr. Aylsworth, and he say3
that the reason why he did not commercially use aluminum hydrate
in the early days, was the difficulty Of getting that material
in pure form. The acetate was entirely satisfactory so long
as the acetic aoid was entirely expelled. Later alum was used on
account of its cheapness. In every case, of course, the desired
end was to secure sterate of alumina whioh possessed the property
of curing the crystalline troubles in the stearate of soda. It
seemB to me that whatever process is used, whether we employ
metallic aluminum, aluminum hydrate, aluminum acetate, alum, or
any other aluminum salt, the result secured is alwayB the Bams,
namely, the production of stearate of alumina.

In speaking with Mr. Mauro yesterday about these
suits, he made it perfeotly clear that he will argue that you
acted merely as a skilled workman carrying out Mr. Macdonald's
instructions. He seemed to feel that thiB would be brought out

A. Melaer, Esq., — 3

■by your letters, but 1 do not boo how that oould be sinoe, as
I underetand it, your suggestion of the employment of aluminum
was made entirely independently of Mr. Maodonald who attempted
only to make use of lead. Did Maodonald at the time of hiB orig
inal disclosure to you employ stearate of soda with free Bteario
aoid?

Another statement made by Mr. Mauro,that 1 think
will interest you, was that you had been fully paid for your
work. 1 of oourse did not argue this point with him, but if
this is his understanding, he must have been misinformed by
his clients.

The taking of testimony 1b dragging along very
slowly, and 1 shall probably not get out to Evansville until
next month.

With best wishes for the New Year, believe me,

ELD/to.

Yours very truly,

n* ://C,

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Eel). 3,1906

A. Melzser, Esq.,

Evansville, Indiana,

Dear Mr. Melzer:-

Your favor of the 31st ult. haB been re¬
ceived. I servdid notice on Mr. Mauro that we would proceed
with your testimony o.t, Evansville on Monday, the 12th inst.
and explained that Mr. Wartmann would not be able to attend
that day, except to administer the oath. This was satisfac¬
tory to Mr. Mauro, and I presume Mr. Wartmann has no objec¬
tion.

Mr. Melville Church of Washington, D.C., who is
associated with me in these suits, expeots to go with me to
Evansville, in order to assist in the matter of taking your
testimony, as it is very important that there should be no
technical slip. Mr. Church tells me that you are an old cli¬
ent of his, and he looks foward with pleasure to meeting you
again. We expect to leave next Thursday afternoon and will
reach Evansville Eriday evening. This will give us all day
Saturday to talk over the matter with you before commencing
with your testimony on Monday.

EED-Abk.

Yours very truly.

MEMORANDUM

for Mr. Edison.

- 0 -

According to Mr. Aylsworth* b testimony, the devel¬
opment of the blank composition was rb follows

He commenced work in Jan. 1808 (p. 11, Q.6) . He
says that at that time the composition in use was compos¬
ed of 100 parts coresln and 30 parts carnauba wax (p. 11,
4.8). The first experiments, upwards of 700 in number,
were carried on in connection with the mixing of "natural
waxes, gums and resins in various proportions" (p. 14,
4.15). The next step was the manufacture of metallio ole-
ates, suoh as oleate of lead (p. 14, Q.16) ; then followed
the manufacture of metallio palmitates (p. 17, Q. 24), and
finally, the manufacture of metallic Btearates (p. 18,
Q.29), Experiments wore also made with "other souroes of
fatty acids than stearate and oleic, and combinations of
the same with oertain amounts of steario and oleic, suoh
as coooonut oil, palm oil, ootton seed oil and peanut oil"
(p. 21, Q. 36).

Under date of August 31, 1888, the following note
was recorded: -

"A serious obstacle was here found in all cylinders
made of cocoanut oil, palm oil, ootton seed, and in fact
all of the oils and fats, in the shape of minute bubbles,
which oould not be Been by the naked eye, but oould be

-1-

very distinctly heard in the phonograph as a crack¬
ling and scratching noise, and could he
Been under the microscope . These wore found after a
series of experiments to he caused hy glyoerin decomposing
slowly while the wax is melted, giving off aordilone and
water, also, to the vaporization of the glyoerin. It was
found that glycerin always ocourred in the wax unless it
was especially well made and washed with alcohol after
precipitating or other processes, which would make it too
expensive for practice. The point at which the huhhles
formed could he raised hy heating the melted wax very hot
and letting it settle and then to the temperature required
in molding, But this operation spoiled the quality of
the wax, and then great care had to he taken to run it
high enou$i each time, and not to let it get too high in
molding, which altogether made it imp r actio able, so the
only way left was to uso fatty acids and not neutral fats
or oils." (p, 21, Q.37).

HOOT: This 1b important because Macdonald, in

his patent, points out the importance of having stearic
acid free from glyoerin.

The metallic oleateB, palmitates and stearatss
first made, and above referred to|i were all hydrated, aThe
neutral soap being first formed, precipitated by a salt
of the metal desired.

The next advanoe was the manufacture of stearate of
soda by saponifying stearic aoid by caustic soda, the
saponifloation being about 70^. Aylsworth's note reads:-
"This makes a soap of a light brown oolor with a very high
melting point, whioh when poured out and oooled becomes

-2-

amorphous on the oooling surface, but orystaline on the
inside. It is almost perfection on the phonograph, ( the
amorphous outside, )as far as articulation, out and scratch
are concerned, but when the oooling surface has been out
through, it becomes soratchy and no good. Also will
absorb moisture on hot damp days which would spoil any
record put on it." (p. 24, Q. 43)

The next step was to roduce the tendency to oryB-
taliaatlon in the stearate of soda, and AylBWorth's ex¬
periment, #858 records the use of aoetate of alumina dis¬
solved in water with caustic soda, forming aluminate of
soda. The note reads :-

"The object of this experiment is to take the
crystalisation out of the stearate of Boda and to make it
mold better. It oame out bang up, non orystaline, good
out, molded first-class, but was electrioal - not bo like>
ly to absorb moisture" . (p. 26, Q.47) /U

Experiments were made with this composition to get the .
correct proportions and the degree of saponification being
gradually raduoed, and the final proportions adopted were
stearic acid 14000 grams, caustic sodalLOO grams, and
acetate of alumina 433 gramB, the composition being Ho.

871. This composition waB regularly adopted by the Edison
Phonograph Works. It was found that thiB composition,
(stearate of soda, free stearic acid and stearate of alumi •
na) waB too hard to bo effectively turned by the steel
knives then in use, and the composition was then changed

*3-

(#957) by the addition of a small proportion of olelo
acid (rod oil) an a ooftoner, and ibis composition was
duly accepted an regular (p. 36, Q. 72). When thiB com¬
position was adopted the v/oather was cold, hut during
the following summer, it was found that reoords and blanks
mado of #957 were affected by the moisture, due to the
fact t]iat the oleate of soda found was slightly soluble
(p,40, (J.78). As a result of this observation, It was
also found that the stearic acid which was then purchased
contained oleic acid in considerable quantities and '’sam¬
ples were obtained from Mitchell & Company which were
very hard and free from olclc (page 41).

NOTE! This is important, because Macdonald points
out that stoario aoid should be free from oleic. Ayls-
worth, however, Bays that all commercial stearlo oarried
from two to five per cent of oleic, whioh iB unimportant.

One of the difficulties experienced in the early days was
due to the presence of mildew, caused by the failure to
drive out all the acetio aoid, resulting from decomposition
of the acetate of elumina, (p. 42, Q. 81) As a result
of the difficulties with oleic acid, ceresin was used as a
softening ingredient, and composition #1029 was made, in
which aoetate of alumina was still used. (p. 43, Q.84)

This composition was regularly accepted by Mr. BdiBon,
and put into use by the Phonograph Works. The next ex¬
periments were to find a cheap substitute for the expensive
aoetate of alumina, and it was proposed to make the stea¬
rate of alumina as a separate ingredient, whioh could be

-4-

dirootly added during the proceBB of saponification. This
was done by completely saponifying stearic acid by means
of caustic soda, precipitated with alum and washing and
drying the prooipitated aluminum stearate, (p. 43, Q.85)

A plant was started having a oapaoity of 500 lbs.
per day of aluminum stearate, which wan known as #1 powder.
Experiments were made to obtain the correot proportions
and formula #1046 was adopted, in which stearic acid was
first incompletely saponified and then stearate of alumina
and ceresln wero added. Thin composition was then duly
accepted as regular, (p, 45) In the manufacture of formu¬
la #1046, Aylsworth refers to the fact that the tempera¬
ture at the end of the operations "was between 400 and
450° E. or as high as it could be carried with safety."

(p. 49, Q.100)

NOTE: This is important, because Macdonald's

patent claims the use of a high temperature,; as a matter
of fact, we have always used a temperature of over 400
degrees at tho end of the operation).

This composition (#1046) was made prior to August 14, 1889.
Can Edison corroborate this date by reference to his trip
to Europe?

Tha next experiment was in the substitution of car¬
bonize of soda for the caustic soda which was done on
August 14, 1889 (p, 51). After the adoption of the form¬
ula in which tho stearic aoid was saponified, byarsal-aoda

-■5-

-v

and in which stearate of alumina was added after being
preoipitated by alum, (operations were carried on at Sil-
ver lake (p. 60, Q, 125) where tho high temperatures were
still used. Aylsworth loft Silver take in January 1891,
being succeeded by Walter H. Miller. At Silver lake the
wax composition was made by the Edison Manufacturing Com¬
pany and upwards of 425,000 lbs. were shipped to the
Phonograph Works between May 1890 and May 1896, when
operations were again resumed at Orange by the Phonograph
Works, in October 1895, some trouble was experienced
with the wax and Aylsworth again took up experimental work
thereon. He concluded that the manufacture of stearate
of alumina was likely to result in impurities and decided
to use metallic aluminum, first in tho powder form. (p.

67) The powdered aluminum was first dissolved in a small
quantity of caustic soda to form aluminate of soda, whioh
was then added to tho kettle in v/hioh the otearic acid
was partially saponified by sal-soda. This metallic aitm*- ..
inum proooss was regularly adopted by the Edison Manuf aotur -
ing Company bofore the manufacture of wax was resumed at
Orange by tho Phonograph Works. About the time the Phon¬
ograph Works took up the manufacture of wax at Orange, sheet
aluminum waB used, , instead of powder. Aylsworth says that
he invented tho metallic aluminum process (p. 140, XQ323)
and that he suggested the substitution of sol-soda for
oau3tio soda, but that this was done with Mr. Edison's
approval, (p. 141, XQ. 328-329) He also states that the
substitution of stearate of alumina made by the alum pro¬
cess for acetate of alumina, as previously used, was the
result of conferences with Mr. Edison, (p. 142, XQ.335).

•V ' ~!6*

He also says that he suggested the uBe of acetate of
alumina (p. 143, XQ/340) but that Mr. Edison had previ-
ously made stearate of alumina by mixing the chloride
with stearic acid and heating to a high temperature
(XQ.341 ) . He also Btates that Mr. Edison suggested the
use of stearate of soda (p. 144, XQ.350), which was the
basis of all of these compositions.

In addition to corroborating the above story as
told by Mr. Ayls worth, as far as possible, there arc cer¬
tain exhibits to bo proved by Mr. Edison. Pirst , a note
in Aylsv/orth's note booh #1000 in Mr. Edison's handwriting
folio-wing entrance made by Aylsworth. We should prove,
if possible that this note was made by Mr. Edison subse¬
quent to the proceeding notes of Aylsworth. Second, a
comparison should be made between our exhibits, "Modem
Blanks" with the blanks made in the early days to show
that the composition is thej same. A rooord made by
Wangemann in Deoomber 1888 should be lndentlfied (p. 189,
Q.10) . Third, also two records made in Boston by Wange-
mann in March or April 1889 (p. 193, IJ.30). Also, a doll
record made in 1889 (p. 196, Q.45). Also a mailing cylin¬
der similar to those sent to Colonel Gouroud in 1889 (p.

196, q.46). Also a lot of reoordB furniBhed by Mr. Upton
and in his possession sinco 1892 (p. 201, Q.21), Also two
records made by Wangemann in Europe in 1889 (p. 203, 73

-7-

and 76), also ono of the old yellow wax records (p. 204,
Q.79).

In addition to questions deal gned to corroborate
Aylsworth'B testimony and to identify the above exhibits,
a few general questions should be answered, as follows:-

Can you state whether or not records or blanks
employing t'ao composition formed of stearate of soda and
free stearic acid (stearic acid saponified to about 50$,)
stearate of alumina (both when added as such by precipi¬
tating with alum, a completely saponified or neutral soda
soap, and when formed concurrently with the saponification
of the stearic acid by the addition of an aluminum salt,
such as the; ‘.acetate) and ceresin v/ere manufactured and
sold in this country prior , say, to the year 1891, and
if so, whether in large or small quantities? By \diom and
whore sold?

Hr. Redfeam, in his deposition has testified to
the purchase by the Edison Phonograph Works and Edison
Manufacturing Company between the years 1889 and 1896
of very large quantities of stearic aoid^^erpstn, sal- sod »
caustio soda (98$), alum, acetate of alumina and powdered
and sheet aluminum. Can you state for what purpose these
ingredients were used? Are you acquainted with the fact
that these purchases were made? How olose a watoh did
you keep on the business, and eBpeoially as to the manu¬
facture of phonograph wax?

*S<*

Mr. Redfeam has also testified as to the ship¬
ments of phonograph wax from the Edison Manufacturing
Comparer to the Edison Phonograph Works during the period
of May 1890 and May 1896, and amounting to over 425,000
pounds. Can you state of your own knowledge what was the
composition of this phonograph wax? Its use? Whother
sold or not?

Mr, Reifeam has also testified to the sales of
phonograph records and blanks to the Columbia Phonograph
Company and others in thin country by the Edison Phonograph
Works between February 1889 and November 26, 1892, amount¬
ing to over 450,000 in number, and between the latter date
and October 31, 1896, amounting to over 750,000 in number.
Can you state of your own knowledge of what composition
those records and blanks wore made? Arcf are acquainted
with and hnvo you ever met Mr. Adolph Melser of JSvansville
Indiana, and if so, when and under what circumstances did
you meet him, and what, if any conversation did you have
with him on the subject of phonograph records and blanks,

F.Tj. Dyer

September 7th, 1906.

NEW YORK May. lfi.visoa. ) ■

- r;

Frank L. JJyer, Bsc;.,. \ \

Edison Laboratory, \

Orange, N..T. ''-V

.Oear Mr. Byer:-

AMERICAN (JJ^APHOPHOTO CO. tb. NATIONAL PHONOGRAPH CO. (MACDONALD

PATENTS).

I have received copy of your supplemental brief, and have read
it far enough to warrant me in congratulating you on a very fine piece
of work. Indeed, I can Bay without flattery that it is one of the heBt
briefs I ever read; and if I add that I am nevertheless satisfied we can

reply to it, my confidence is based solely upon the soundness of the
propositions of law on which we stand.

Meanwhile, it seems to me decidedly the part of wisdom to
consider whether it would not be best to dispose of this case according
to the View expressed by the Court, namely, sustaining the patents with
a license to defendant. I feel at liberty to urge this view because
defendant has nothing to gain by invalidating the patent, but just the
reverse. I would adviBe my client to accept as a quid pro quo a license
under the Carnauba patent (a decree sustaining it alsO to be entered)
and the dismissal of the Test Virginia suits. These suits may be
dismissed without prejudice, as we do not want a license under the
patents there involved. That Our present operations are ndt an in¬
fringement should be clear to you upon the evidence.

Very truly yours,

May 19,1908.

Philip Mauro, Esq.,,

154 Nassau Street,

New York, N.Y.

Dear Mr. Mauro: ~

Yours of the 16th inst. is received and
I thank you for your commendations of my supplemental brief.

I could never Bee these cases from your point of view.
The two Macdonald patents I have alv/ays felt were invalid
and tainted with dishonest^. It would he very hard for me
to shut my eyes to these facts.

So far as the Aylsworth patent is concerned, I suggest ft
ed that my people would he willing to grant a license there¬
under for $10,000., hut possibly we might accept a smaller
amount .

The West Virginia suits I intend to press. We may
not sucoeed, hut I shall at least have the satisfaction of
feeling that I have done my best and made every reasonable
effort to protect my clients ' interest .

Should you desire it, I will of course he only too gla$
.to meet you and talk over these matters, because I realize
that litigation is to he always avoided, when possible. At

constituted, that it

the same tine, our rainds seem to be so
is almost impossible for us to view matters of this sort from
the same standpoint.

Yours very truly,

pld/ark.

General Counsel.

Kay 28, 1908

Regarding the several composition suits, con¬
cerning whioh I spoke to you yesterday, I would like to
have your formal approval of the proposed compromise. Shore
are three suits altogether; two in which wo are defendant and
one in which welfare complainant.

The first Graphophone suit is on the Macdonald
patent describing a metallic soap with which aluminum is
used to prevent crystallization. This invention had boon
uBed by us many years before the Macdonald application was
filed, and one of the formulas waB acquired directly from us
through a former employee named Storms. The patent, in my
opinion, is absolutely Invalid, hiit unless, -the defence is
brought out, it would be of value in excluding foreign records
from the American market.

The second Graphophone suit is based on the
Maodonald patent in which the soap composition is formed at
a high temperature. This has always been our practioe and
in my opinion our prior use would bo a valid defence, al¬
though the invention was independently made and not dishonest-

Mr. Edison

May 28, 1908

ly acquired. The patent would have some value in stopping
tho practice of an infringing prooess in this country, hut
would have no value in excluding foreign records.

Our own suit against them is based on the
Aylsworth carnauba wax patent, \7e do not use oarnauba wax,
and although tho olaims might in terms bo broad enough to
include our present composition, there is some doubt on this
point. Tho Columbia Company probably still use oarnauba
and to enjoin them under tho patent would probably drive
them to the uso of another material. The patent can be
effectually used to support our jobbers and dealers agreements
and it would bo for this reason unfortunate 6n;have it de--
olar.ed invalid, although I would not expect suoh a result.

Should the oosob proceed to a final decision, in
my opinion tho two Macdonald patents would be invalidated
and I have strohg hopes that the Aylsworth patent would be
sustained and be held infringed. Suoh a result would open
up the market generally and any one could freely use the
stearic acid-aluminum soap . The sustaining of the Ayls-
worth patent would probably not be seriously embarrassing
for the Graphophono Company since they could certainly leave
out the carnauba wax until some substitute was discovered,

. although Mr. Hauro tells me that they have boon prepared to
change their composition in the event of an unfavorable de¬
cision

As a business proposition, I think we should be con-

Mr. Edison

May 28, 1908

tent to have the Macdonald patents remain in foroe, be-
oause in that way we would have oomo protection from foreign
Competition. tinder existing conditions 1 do not see how
,muoh would ho gained even if v/o prevailed on the Aylov/orth
patent. Our principal object lias, however, boon secured,
namely, putting the Graphophone Company to as great an ex¬
pense in connection with these 3uits as possible. I re-
oommend, therefore, that the matter be compromised by tho
Graphophone Company withdrawing 'their suits and by our with¬
drawing our suit; by their agreeing not to sue us on the
Macdonald patents and our agreeing not to sue them on the
Aylsworth patent.

I would like to have your approval of this sug¬
gestion.

mD/kn.

Trank L, Hyor, Sen,, , -

Idieon Laboratory, V'

^P*ange, T. JV . .l, }K

Dear Ur. Dyer :« X_ */'

TRKBTOF OASES* Inoloeed herewith | hand you the original
of ’proposed fetter tp Mr« Oliphpnt, - if it meet? with your approval,
wil^you kindly sign and forward it,

Touro Tory truly.

TOS-tf

[ATTACHMENT]

HeurjnD. Oliphant, Baq. , Clerk,

" U. S. Circuit Court,

'fronton, H.'. J.

Dear Hr; Oliphant

AMERICAN ORAPIIOPHOim CO. v. NATIONAL PlIONOGRAHl CO. ,

IK EQUITY, #10,, MARCH TERM, 1903; ,!

SAME y, SAilK, 'IN EQUITY #11, MARCH TERM, 1905}

JBRSnr '[PATENT CO. v. COLUMBIA PHONOGRAPH COMPANY,
OmSnSKAL, IN EQUITY, #12, MARCH THRU, 1903.

A oon^ent decree, in each of the above-entitled ciuitB;
dismissing the bill without costa to either party as against the#,
otlier. hao this day been mailed to Judge I, aiming with the request
that he sign them. Judge banning was asked to kindly request you
to notify us of the date of the entry of the decrees.

As there will be no appeal in any of the three above-
entitled capes,. counsel for the respective parties unite in requests
ing you to divide between them oil printed copies; (except the number
you are required by law to keep on file in your of floe) of the-
record In oaohof these oases. It will be graatly appreciated if
ypii will kindly forward one-half ths number of, records to Prank
pyer, Esq. , Edison Laboratory, Orange, N/ J. , and 'the other half , to- ■
pb.ilip lIauro, Esq., Tribune Building, Now York'Gity.

- -f

June, 11, jWdB.-

June 12, 1908

C, A. L. Maasie, Esq.,

154 Nassau St., v,

Tribune Bldg. , 1

Hew York, N. Y.

MACDONALD SUITS AKD AYLSWORTH SHIT,
Dear Hr. kassie:> /

Your several lettoro, in these ousos, are
received. 1 have signed the letter to the Clerk, Oliphant,
at Trenton, asking that the printed copies on file he divided
between us, and have mailed this letter to Trenton',; •

1 note that you have mailed the ponsent ' -
decrees to Judge Banning. Kindly notify me.wl/cn you have been
informed, of the date of entry of these decrees1. '\

Yourn very truly

General Counsel .

hhd/chh

Legal Department Records
Phonograph - Case Files

American Graphophone Company v. National Phonograph Company
and Blackman Talking Machine Company

This folder contains material pertaining to the suit brought by the
American Graphophone Co. against the National Phonograph Co. and one of
its agents, the Blackman Talking Machine Co., in the U.S. Circuit Court for the
Southern District of New York. The case was initiated in June 1909 and
involved Richard B. Smith's U.S. Patent 881,831 on a reproducer swivel arm.
The selected documents consist of affidavits by Edison, William Pelzer, and
Peter Weber, along with three blueprints accompanying Edison's affidavit. Also
included is an undated item, probably written by Frank L. Dyer, comparing
Smith's patent with reproducer patents issued to Edison and John C. English.
Among the documents not selected are the consent decree admitting
infringement of the Smith patent, by which the suit was settled in December
1911, and additional affidavits describing methods formerly used at the Edison
Phonograph Works for mechanically duplicating phonograph records.

Ill THE UNITED STATED CIRCUIT COURT
SOUTHERN DISTRICT 01' HEff YORK

AMERICA!! GRAPHOPHOHE COMPANY,

Complainant,

vo.

RATIONAL PHONOGRAPH CO!.<PAHY

and

BLACKMAN TALKING MACHINE COMPANY,
Defendants.

)

j IN EQUITY

: Smith Patent No. 881,831

AFFIDAVIT; OF THOllAS A. EDISON

State of New Jersoy, )

:sa. :

County of Essex. )

THOMAS A. EDISON, being duly

sworn, deposes and ooys!-

I reside at Llewellyn Pork, Orange, New Jersey,
and am an inventor. I invented the phonograph upward of
thirty years ago and have devoted a largo part of my time
since then to devising Improvements upon the same, ond
have token out a largo number of patents upon those im¬
provements. One of the early structures whioli 1 devised
was a reproducer in which the reproducer stylus was mount¬
ed upon one ond of a lever, nhloh lever was pivoted to a
weight, which weight was, in turn, piloted to the body of

-1-

the reproducer , the other end of the stylus lover being
connected to the diaphi*agra. This reproducer wiu} covered
by iny United States patent Ho. 430,27fl, and wont into
very extensive uoe. During the experimentation which pre¬
ceded the filing of the application upon which thin patent
wan granted, it was perfectly clear to me that the stylus
must have latdrnl play in order to aacoinmodato itself to
irregularities or deviations of the record groove; also
that the stylus must be capable of bodily movement towards
and from the axis of the record cylinder so as to acoonuao-
date itself to the sooentrioitics of the cylinder; and
I aloo that the stylus must bo weighted bo ao to bo hold
down to its work. All this is explained in the patent to
which I have referred, the floating weight applying the
nooonsury pressure to the stylus and at the sumo time per¬
mitting it to move to take oars of the eooontrioition of
the record cylinder, and tho lateral plrsy of the Btyluo
io provided for by making tho opening in the lovor consider¬
ably larger than tho pin upon which the lover vibrates.

This patent oovered broadly the "flouting weight* type of
reproducer which lias been used vory extensively up to tho
present time by the licensees under this ]>atont and after
its expiration, by our competitor, the American Graphophone
Company.

Drier to the filing of tho application upon which
this patent was granted, 1 experimented with various mount¬
ings for tho otyluo lever whiah would permit it to move
laterally with respect to the floating weight. One of
those structures consisted of a swivel which oscillated
on a vortical axis with respect to the floating weight

-2-

and to which the stylus lover v;a3 pivoted, the structure
■being shown in the acoompanying sketch markod "Kdison
Swivel Nepraduoor". 1 had several of theae reproducers
made at my laboratory in Went Orange, Hew Jersey, about
thiB time, which was probably in 1888 or 1889, They were
made by IFrad Ott, who wao employed by me us an instrument
maker for the purpose of ranking phonograph reproduoero
and other instruments an d raoohnniomB. Those reproducers
were tried upon phonograph records and operated very suc-
eausfully, I found, however, that it wac not neaeosary
to U3<3 thiu swivel, ao tho otruoture shown in this patent
No, 430,878 operated perfectly, and as it was much simpler
and cheaper to manufacture, 1 decided not to use the
swivel. 1 considered the latter a meohunioal equivalent
for the form ohown in this patent and did not illustrate
it in tho patent, although r$r claims covered it. X have
never found it necessary to mount tho stylus lever on a
swivel for reproducers operating upon records having
100 threads per inch, which have been the only records put
out commercially from the early dayB until the Amberol
records having 200 threads per inch were put out by the
National Phonograph Company in October 1908.

it was, however, from the earliest times
found neaeosary to use swivel mountings for tho stylus
levers in tho duplicating machines, probably because the
duplicating of a phonograph reoosd iu a much more difficult
proposition than the reproducing of a record, and requires
greater meohanioal perfection and accuracy in the moving

-3-

parts, Therefore, it has been the practice to mount the
reproducer stylus on a swivel in ell duplicating maohinee.

Commercial duplicates at the present tine are
mfido by a ousting or molding operation, but formerly they
were made by meohunioal transference in a duplicating
machine. Thane machines usually comprised two mendrelB
rotating on parallel axes, one mandrel carrying a master
record and the other a blank to be made into a record.
Bbtioeen the master reoord and the blank was a lever or
system of levers, one of which carried a reproducer stylus
for tracking the record on the mooter cylinder, and another
a recording otyluo for cutting in the blank a record,
which, of course, would bo a duplicate of that on the masts',
since the movements of the recording stylus corresponded
exactly to those of the reproducer stylus. In all these
machines which were used in large numbers by the Edison
Phonograph Works for the produotion of commercial phonograph
records which were sold throughout the United States in
very large numbers from about 1091 up to about the present
time, the reproducer stylus was mounted upon some kind of
a swivel for permitting lateral movement, and thlB swivel
was oarried either by a floating weight or by a movable
frame to which a weight nas applied. These machines were
seen by large number*) of employees and vlBitore to the
plant at various times prior to 1901.

1 have looked at the drawing of United EtatoB
patent Ho. 881,831 to Umith, and I note that the axis
upon whi oh the otyluo lever o ccillaten is intersected by

a prolongation of tho uxis of the uwivel member. In do**
fondant's reproducer "Combination K«, the axis upon which
the reproducer turns is at a eubotantiul distance from the
prolongation of the axis of tho swivel member, 1’hio latter
structure is superior to tho former in that the stylus
lever iB more sensitive to lateral movement, This is be-
cauDU there is lens friction of the svrivol member with ra-
epeot to its support, due to the fact that the angle throu*
which the swivel member turns with any given movement of
tho otylun diminishes as the distance of the axis of the
snivel member from tho aids of the lever increaoeu. In
order to make ray motming clearer, I have annexed hereto a
oketoh marked "I’d icon Ckotoh" , in which Figure 1 chows the
ajcis of the reproducer otyluu intersooted by the axis of
tho swivel, and Figures 2 and 3 show the nwivol axis at a
subotantial dintonoe from the lever axis. The structure
of figure 2 is more nonoitivo than that of Figure. 1 and
that of Figure 3 is noro liencitivo than that of Figure 2.

Sworn to and subscribed before me
this *^‘^Foy 0f July, 1909.

Notary public, state <

: OF NEW JERSEY

[ATTACHMENT]

NATIONAL PHONOGRAPH COMPANY
and

BLACKMAN TALKINQ MACHINE COMPANY;

Defendants.

IN EQUITY
Smith Patent No. 881,831

Defendants Exhibit - .EDISON SK-ETCH

united states circuit Court

SOUTHERN D/STRICT OF NEW YORK.

HPt£PICS}M GHHPHOPHONi con PH NY,

Dart,

oa//>-/ u sr/7r£<5 c//rc(//r court

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UNITED STATES CIRCUIT COURT

SOUTHERN DISTRICT C

AMERICAN GRAPIIOPHONE COMPANY,
Complainant,

NATIONAL PHONOGRAPH COMPANY
and

BLACKMAN TALKING MACHINE COMPANY,

' NEW YORK.

)

In Equity.

Smith. Patent
No. 881,831

AFFIDAVIT OE WILLIAM PELZER.

State of New Jersey, )

J BB.

County of Essex. )

WILLIAM PELZER, Being duly sworn, deposes and
aaya: I am the Vioe-PreBident of the National Phonograph
Company, one of the above named defendants; I have read
oopiee of the affidavita filed on behalf of the oomplain-
ant herein; I am familiar with all of the negotiations
whioh were had at various times by the National Phono¬
graph Company, acting through its President, Prank L.

Dyer, hiB predecessor, William Gilmore, and myself, Ur.
Dyer and Mr. Gilmore having kept me advised as to what
waa done by them. Mr. Dyer is not in this country at
the present time, aa he Bailed for Europe on July 10,

1909, the bill of complaint having been filed in this suit
immediately after his departure.

In August, 1907, William H. Barker of New York
called to the attention of the National Phonograph Company
an invention of R. B. Smith, and early in September, 1907,

Mr. Smith called upon our superintendent, Mr. Peter Weber
and showed him thiB alleged invention, which consisted
of a swivel attachment for supporting the Btylus lever
of a phonograph reproducer. Mr. Weher at this time
advised me that the scheme was of no use to us, and re¬
quested me to tell Mr. Barker that we were not interest¬
ed in the devioe, and I think this was dona by me.

Shortly after the grant of tlm patent Mo.
881,831 to Mr. Smith and in the latter part of Maroh,

1908, this alleged invention wbb again submitted to the
National Phonograph Company, and Mr. Gilmore requested
Mr. Weber to report on the same. Mr. Weber reported
that Smith' s soheme of supporting the stylus lever on
centers waB a nice way of mounting the lever, but very
expensive and unnecessary, and also that the swivel wae
the same scheme used by us on duplioating machines.

It should be noted that at the time of Mr.
Weber's report, the National Phonograph Company was put¬
ting out only reoordp having 100 threads per inoh, and
the Smith reproduoer with reoords of this .type- was found
to be of no improvement over the reproduoer in use by the
National Phonograph Company then, and for many years prior
thereto.

A short time afterwards, about the end of June,
1908, and after the National Phonograph Company had de¬
cided to put on the market a new type of record having
200 threads per inoh, Mr. Weber showed me a reproduoer
in which the stylus lever was mounted on a swivel and
was adapted for this new type of record. It then oc¬
curred to me that it might be advisable to aoquire the
Smith patent. I did not consider it a valid patent,
Sinoe such BWivels as this were commonly known in this

2. '

art, tut aa it is always expensive and troublesome to de¬
fend a patent BUit, I thought it would he hotter to pur¬
chase the patent than he put to thisexpense. I there¬
fore called the matter to the attention of Mr. Dyer, and
on July 8, 1908, Mr. Dyer wrote to William H. Barker a
letter reading as follows:

"July 8, 1908.

. H. Barker, Esq.,

62 Broadway,

New York.

Upon assuming the duties of Chairman
of the Executive Committee of thiB company I
find that there was some correspondence with
you in August and September of last year in
reference to patent of Mr. Smith, No. 881,831,
of March 10,1908. , It occurs to me that the

company might have some UBe for this patent for
Improving somewhat the tracking quality of the
stylus. Of course the reproducer would he
somewhat more expensive and the advantage gain¬
ed would he sraalj, hut if you would care to
take up. with me. the matter of possibly purchas¬
ing the patent I would be very glad to meet you
or any other representative of Mr. Smith at my
New York office on any Tuesday or Thursday. If
you will let me know when you can see me I will
arrange definitely to meet you.

Yours very truly,

Chairman Executive Committee."

A letter was received on July 10th in reply
and read as follows:

■New York, July 9,1908.

Mr. Trank £. Dyer,

The National Ehonograph Co.,

' 0 r a n g e, N. J.

Dear Sir:

' ■ ' ■ £ Ueg to acknowledge receipt of your

letter of July 8th, 1908. In reply would say
that Mr. Barker is out of town, hut expected to
return next week, when the matter will he brought

Very truly yours,

(Sighed) Win. H. Barker,
per. K. Breuner."

Mr. Dyer apparently did not succeed in seeing
Mr. Bar leer until August 14th, 1908, at which time he
offered him $1,000.00 for the Smith patent,, and Mr. Barker
stated that he would submit thiB offer to Mr. Smith.

On August Slst, Mr. Dyer wrote to Mr. Barker asking him
if he had heard from Mr. Smith, and on August 27, 1908,
a letter was received reading as follows:

, "Mew York, Aug. 26,1908.

The National Phonograph Company,

Mr. P. L. Dyer,

Orange, N. J.

Dear Sir:

1 have learned this morning that
the Smith patent that you contemplated pur¬
chasing is subject to an option, the exaot
period of which I have not yet ascertained.

I am inf ormed that as Boon as the option
expires, I will be notified and may then have
an opportunity of taking up the question of
purphaae. I will endeavor to ascertain just
how long the option has to run and advise you.

Very truly yours,

Diot. W.H.B. (Signed) Wm. H. Barker,

B.”

Mr. Smith afterwards told Hr. Dyer that he had
assigned the patent to Mr. Powers on August 18, 1908, and
that this sale was made in the office of the Douglas
Phonograph Company in the presence of Charles V. Henkel,
John Kaiser and others, the consideration being $2000.

The date of this sale of the patent by Smith
to Powers is important because on or about August 13,
1908, a phonograph, together with a number of 200 thread
records and the new type of reproducer for playing the
records and having the stylus lever mounted on a swivel,
was set up at the New York office of the National Phono¬
graph Company at No. 10 Pifth Avenue, for demonstration
to a large number of jobbers in advance of the date set

s..

for placing thismachine and record on sale, and was shown
toy me at thie time to Messrs. P. A. Powers, Charles V.
Henkel and John Kaiser* I noticed that Mr. Kaiser
and Hr. Powers examined the reproducer very carefully,
tout I supposed that they were interested in the stylus
whioh was of a new and original form never before used
in the phonograph, and would naturally attract their
attention, as these men were all in the phonograph
business at that time, Mr. Powers being a jobber of the
national Phonograph Company, Hr. Henkel being the pres¬
ident of the Douglas Phonograph Company, another Jobber
of the National Phonograph Company, and Hr. Kaiser being
also with the Douglas Phonograph Company. ThiB diB-
olosure was in a way confidential, because it was the in¬
tention of our company to Bhow this apparatus only to our
jobbers upon Whose loyalty we relied, never suspecting for
a moment that any of them would take advantage of this
advance information to go after Hr. Smith and buy up the
patent for whioh at that very time we were negotiating.
Nevertheless, this wub done and the patent was secured
on August 18, 1908, in the name of Hr. Powers, but possibly
also for the benefit of Mr. Henkel.

Toward the end of the month of August, 1908,
and while Mr. Dyer and I still believed that Mr. Smith
was the owner of the patent, Mr. Henkel oame to me and said
that he thought that he could buy the patent from Mr.

Smith for about $10,000. or a license under the patent
for $6,000, but that Mr. Smith would not sell at any
prioe to the National Phonograph Company, on account of
the failure . of his previous negotiations for the sale of
the Invention. I told Hr. Henkel that this prioe was
entirely too high, and that we would not pay as much as thai
5.

and that neither Mr. Dyer nor I considered the patent
valid, hut in order to avaid litigation we would pay
a reasonable prioe for the. same.

Some time after this Mr. Henkel told me that
he thought the patent could he purchased from Smith for
$5,000., and that Smith thought he was dealing with Mr.
Henkel either personally or aa president of the General
Phonograph Supply Company. Upon consulting with Mr.
Dyer, we oonoluded that it might he worth $5,000. to
secure the patent and avoid "strike" litigation. On
or about October 6, 1908, I had a check for $6,000 drawn
to the order of 0. V. Henkel and handed it, to Mr. Henkel
to be used for the purchase of the patent from Mr. Smith.
Mr. Henkel reported that Mr. Smith would Bell the patent
for $5,000., with the proviso that he was to. retain the
right to UBe the device on a "three -diaphragm" reproducer
which he had designed, and which was agreeable. In or¬
der to be certain that we were not. paying more for the
patent thah Mr. Smith demanded, I had a form of assign¬
ment drawn in which the consideration was stated at the
full amount pf $5,000. Shortly after this form was
given to Mr. Henkel, the latter repprted to me several
times that the matter had not yet been olosed. oyring tP
some difficulty between Mr. Snith and his Attorney, and
finally on pressing Mr. Henkel for a final answer* he
told me that Mr. Smith would not sign the assignment, be¬
cause it stated the, consideration at $5,000., and that
the patent, really belonged to Mr. Powers who had bought
it from Smith before I Bent Mr. Henkel the cheok. This
was the i first, that I; had heard of any sale having been mad it
by Smith, and I was very indignant that Henkel had not
reported the true situation at onoe, and even more so to
6.

hear that Mr. Powers had violated the confidence which
I had show# in him when I demonstrated the 200 thread
apparatus to him at our Fifth Avenue office, hy purchas¬
ing the patent for the evident purpose of embarrassing
the national Phonograph Company. I asked Hr. Henkel
to return to me the $5,000. whioh I had advanced, and
which he did. After this, some negotiations were had
with Mr. Powers, but we were unwilling to pay Mr. Powers
more than he had paid Mr. Smith for the patent, namely,
$2,000. , as we did not feel that' he had treated us right,
and as we believed the patent invalid, we decided to
litigate the questions involved rather than pay the price
which Mr. Powers demanded for the patent.

ThiB patent, as I. am now informed, is owned
by the American Graphophone Company. ThiB company is
the manufacturer of talking machines, hut I am advised
that they are not making any UBe of: the patented structure
in their tnaohines,and believe that they acquired the pat¬
ent for the sole purpose of bringing suit. againBt the
National' Phondgraph Company.

UNITED STATES CIRCUIT COURT
SOUTHERN DISTRICT OP NEW YORK

AMERICAN GRAPHOFHOHE COMPANY
Complainant

vs.

NATIONAL PHONOGRAPH COMPANY
and

BLACKMAN TALKING MACHINE COUP AW
Defendants

APPIDAVIT OP PETER WEBER

State of How Jersey )

: so.

County of Essex )

PETER WEBER, of legal ago and a resident of
Orange, in the County of Essex and State of New Jersey,
heing first duly sworn, on oath dopoueo and says:

1 am General Superintendent of the Edison Phono¬
graph Works and affiliated oorapanlen at West Orange, N. J.,
which position I have held since about the yoar 1899.
Several years ago, and as near sb I oan reoollect, about
the year 1902, a man by the name of Richard B. Smith
applied to me for employment and I set him to work on
phonograph reproducers. Por a month or so he was looated
in a room in the roar of the building at that time used
for offices, and of tor that I found him a place in the
reproducer assembly room in the factory. In the part of
the office building where he waB looated first there were

j In Equity.
)

(1)

a number of appliances of various kinds that wore left ther
by Mr. Adolph F. Gall who had formerly occupied the name
quarters. Mr. Smith, who was of a very inquisitive turn
of mind, had access to all those things and had full
opportunity to acquaint himself therewith. There were
at that time also a large number of meohanical duplicat¬
ing machines which had boon in uoe about the factory
a few years before. All these mechanical duplicating
machines were constructed with swivel reproducer stylus
lovers so that the reproducer styluB would be free to move
sidowiso if tho groove in the master record did not corres¬
pond precisely with the feed screw of the machine. It
was the general practice to equip meohanioal duplicating
machines in, thiB way, and Mr. Smith in his employment in
the factory and in tho office building oould not have
failed to observe these duplicating maohines, some of
which had then been thrown aside because they had been
replaced by molding machines and wore no longer in use.

During the year 1907 this some Richard B. Smith
again came to the Works and offered to cell us an applica¬
tion which he had made for a phonograph reproducer in whict
the reproducing stylus waB Bwiveled in the floating weight.
This patent being valueless in my estimation because it
covered no more than the swiveling of the reproducer sty¬
lus in tho floating weight which wan a construction whioh
1 know to be very old, 1 turned down his offer and refused
to purchase hiB application or tho patent which he might
obtain for this structure.

PATENT IN SUIT AND DEVICE ALLEGED
TO INHUHGB

The patent in suit io discussed in the affidav¬
its both of complainant's and defendants' experts, end it
is oleorly shown by the affidavit of defendants' expert,

Ur. Holden, and the extracts he has made from the file
wrapper, that the supposed novelty therein disoloBod and
which led to the grant of the patent consisted in Bwivel-
ing the styluo lever in the floating weight of a phonograjh
reproducer in ouch a manner that the horizontal axis upon
which the stylus lever vibrates intersects a prolongation
of the vertloal axis of the swivel and that this feature
of oonBtruotion io set forth in each of the claims. Whan
the application was first presented, claims were made
broadly to a owlvel mounting of the stylUB lever in the
weight. These olaime wore canceled in view of the English
patent No* 17,103 of 1896, which discloses the precise
structure of the patent in suit, except that the vertical
axis of the swivel io offset from the horizontal axis of
the stylus lever and when prolonged the vortical axis of
the swivel doeB not intersect the horizontal axis upon
whioh the stylus vibratoB, and the patent was allowed with
its present claims, limited to a structure in which ^tho
axis upon which the stylus lever vibrates is intersected
by a prolongation of the axis of tho swivel.

The"ttombination K" reproducer used upon on
Edison Eireolde phonograph haB been introduced in evidence
by complainant and it is this device which oomplainont
alleges infringes tho Smith patent in suit. The most

-2-

cursory inspection of thin devloe will eihow that in it
the horizontal axiB upon whioh the stylus lever vibrates
does not intersect a prolongation of the Bwivel axis, but
is offset therefrom. The distance between these two axes
when considered apart from the structure and as a matter
of absolute dietanae, is not groat, and perhups is not over
1/8 to 3/16 of on inch, but it must be remombered that a
phonograph reproducer is a watch-maker's job, and that
distances which, when considered by themselves and without
relation to the other parts o f the device would be very
email, yet, may be relatively quite lurge. In the "com¬
bination K." reproducer, this offset is at least one-fourth
of the entiro effective length of the Btylus lever and 1b
more than one-half the length of the shorter arm of this
lever, which is the diatanoe between the horizontal axis
of vibration and the stylus point whioh tracks the record.
Complainant1 b expert in order to Bhow infringement has
been forced to Bny that the swivel axis and the stylue
lover axis in the "combination K" reproducer eub stent i ally
intersect. But he ip in the wrong. So far from there
being a substantial intersection, wo submit that an in¬
spection will demonstrate to the Court that there is,
when the relative Bizes of the other parts of the instru¬
ment are considered, \diich of course muBt necessarily/ be
done* a very substantial offset between these two axis lines.
It is this "combination K" reproducer, in which the swivel
axiB and the stylus lever axis are separated by at least
half the length of one of the lever arms, whioh ooraplain-
ant ohorges to be an infringement of the claims of the

-3-

patent in suit, 'fheso claims having been limited to a
construction in viiicli the two axis linoo which wo have men¬
tioned intersect, and this limitation having been mode in
view of a patent in which the two axis lineB were off net
from ono another, it is perfeotly apparont that the claims
of the patent cover only such a structure as is shown by
the figures in the drawings thereof in which the two axlB
lineo named inter seat and cannot bo construed or broadened
to cover a structure in which thoee two axis linoB ore off-
oet from one another. At any rate, such a construction
or broadening of its olaimo ia fatal to the patent, uo the
English patent ehowe the off oet swivel.

So far we have considered only the etructure of
these three dovioeo; the patent in milt, the English pa¬
tent Ho. 17,103 of 1090, and tho" combination K" reproduoor
alleged to Infringe, v/ithout any referenoe to the principle
of operation thereof. It io very conclusively shown by tho
affidavits of Messrs. Edison, Gall and Pierman filed on be¬
half of defendants, that in addition to the differences
of structure to which attention has been called, there io
a difference in principle between the operation of a re¬
producer in which the axes are offset, from that in which
tho axes inter seot as io the case in the patent in suit,
and that the former is much superior to the latter, lte.
Edison has brought out these differences very clearly in
his affidavit, and hau filed a sketch which clearly illus¬
trates their different prinoiples of operation. As he
points out, when the axis lines in question interseot, the
amount of fetation of tho swivel member to produce a given

.4-

lateral deviation of the otylus is a maximum, and when the
awivol axlo is moved away or offset from the lever axle,
there in a corresponding doorcase in the amount of rotation
of the swivel member necessary to produce the name amount
of lateral deviation in the stylus. It will be seen, there¬
fore, that this "combination K" reproducer with its offset
axis lines which ore taken from the English patent referred
to, not only does not infringe the patent in suit, but
produceci a better, more delicate structure and one operat¬
ing on nn improved and different principle from that of
the patent in suit* and that instead of the Smith patent
in suit being for an improvement over the English patent
which was oitod against it, it is a stop backward in the
art.

■9XIES AXIOMS AHB BRIDIt TJBRS

Vfe bolieve that the foregoing considerations
absolutely dispose of this motion. But there is even more
to be said against this patent.

It is anticipated by Edison patent ho. 430,278,
which shows an equivalent universal mounting for the otylus
lever; patents Hoo. 659,738 and 635,739, sIbo nhow swiv¬
eled reproducer stylus lovers..

The precise device of tho patent in suit, oven
to the intersection of the swivel and stylus lever axis
Lines, was made, completed and reduced to praotioe on two
different c occasions long before Smith oven thought of it.

I he affidavits of Edison, Ered Ott and John Ott, show that
uch a dovioe was mode by Hr. Edison in 1888 or 1889 and
boss of Ball, Morris and Eokel establish the making of a
honograph reproducer embodying these features, in 1901.

-5-

The only reason that theoe reproducers wore not adopted
and put into genoral uoe wue that they represented unnec¬
essary refinements for the one hundred threud record.

Inter vfticn the more delicate tv/o hundred thread reoord
was produced, this refinement of the reproducer structure
was put into use, hut Smith and hin patent had absolutely
nothing to do with it; the contribution to the art had
long been mode when he entered the field, only the occas¬
ion for ita uue had not arisen.

B?ffiUsa*Aag MME-tewa

The structures made in 1888 .or '1889. by Edi a on
and by Call in 1901, were reproducers. This problem of
giving lateral play to the reproducer otylue was by no
means a new one in 1907 when Smith applied for hie patent,
for not only did the English patent ho. 17,103 of 1896
and Edison patent E'o. 430,878 point out the problem and ita
solution, but the mimo problem had likewise been presented
and solved in connection with mechanical duplicating ma-
chines. It was do sir able that a reproducer stylus be giv¬
en lutoral play bconune otherwise it might occasionally
skip a groove or two df the record in raproduoing, but it
was absolutely essential in a machine for making a moohan-
ioal transference of a record groove to a blank cylinder
that the reproducer should hover skip a groove, aa the
nov/ reoord would be ap oiled and could novor bo used to
reproduce from oorreotly. ?or this reason, practically all
duplicating machines have been modo with swiveled reproduc¬
er stylus bars and in praotioolly every oase the axis lines

.6-

of the swivel and of the stylus lover have intersected.
Several such devices and sketches of others are in evi¬
dence and these machines were used to manufacture many
thousands of dupliouts engraved records which were sold
to the public. The patent to Capps, Vo. 836,089 shows

such u device. Tho affidavits of Walter H. Miller, 3?red

Ofct, JTohn Ott and Mrs. Devonald prove tho use of a dupli¬
cating machine at Silver lake in 1892 having a stylus
lever swiveled in a flouting weight in precisely tho
fashion of the Smith patent and connected to a diaphragm

so that it was a phonograph reproducer as well as a

duplicating machine. This use is a flat anticipation of
thin Smith patent, including the feature of intersecting
axis lines.

The history leading up to complainant's alleged
acquisition of the patent in exilt is sot forth in the
affidavit of William Pelzer. passing without particular
remark the faot that the proofs of complainant's title
are more than meagre, the complainant appears to feel that
the special circumstances which may some times Justify the
granting of a preliminary injunction on a green, unadju-
dioated patent are to ho found in tho fact that the Nation* .
Phonograph Company negotiated for the purchase of the paten;
in suit. The partial story of Powers and Henkel who have
made affidavits on behalf of complainant, has beon comple¬
ted by Pelaer’s affidavit, bringing out the hietory of the
breach of confidence and misrepresentation of fact indulged
in by Honors. Powers and Henkel in the conduct of the nego¬
tiations looking to the sale of this patent.

,7>

Inasmuch as the patent lias never ho on adjudicated,
is invalid, is not infringed, and in construing it to sup-
port tlio infringement charge, complainant substantially
admits its anticipation by the English patent of 1896,
complainant is believed to be correct in the idea that
some very Bpacial circumstances must be shorn upon which
to predicate the grant of a preliminary injunction, but
we very much doubt whether* these circumstances are to be
found in the method in which complainant acquired the
patent in suit as a result, first, of improper use by un¬
scrupulous schemers of the confidential communication. of
the National Phonograph Company, and second, of an effort
to hold up tho national Phonograph Company in the name
of the inventor, but really for the benefit of the design¬
ing schemers. Special equities, such as would justify
the granting of a preliminary injunction, have no exist¬
ence in this oase.

It is a well recognised principle that a prelim¬
inary injunction will bo refused where there are circum¬
stances which raise a doubt. It would seem that a case
would never be brought on for preliminary injunction where
more doubts as to corqjlainant's rights to relief existed,
than have already been pointed out, but in addition to all
the matters already discussed, it is shown by the affida¬
vits of Gall and Weber that tho patentee Smith was engaged
at the Orange plant about 1902 and p;as located in a room
which had bsen occupied shortly before by Gall, and that
the latter had left in this room the swivel reproducer
made by him in 1901, and of which the construction patented
by Smith is almost a Chinese copy. Weber says that Smith

-v

eohiblted an in^uiuitive disposition and had acoeso to
whatever wo a left by Gall, Of course Smith himself is
the only person who knows whether ha saw 0*11*8 1901 re¬
producer there, hut wo submit that under the circumetonocB
which hayo been shown to have existed relative to 3mith*o
employment about 1902, trron in the ahaonoo of tiny other
defense, a preliminary injunction should not "be granted.

In yiev/ of the foregoing, we respectfully and
confidently ask that the motion for a preliminary injunc¬
tion he denied.

Of Counsel.

Legal Department Records
Phonograph - Case Files

American Graphophone Company v. Cleveland Walcutt etal.

This folder contains material pertaining to one of several suits brought by
the American Graphophone Co. against Cleveland Walcutt and his associates
in the U-S. Circuit Court for the Southern District of New York. The case was
initiated in 1894 and involved U.S. Patents 341,214, 341,288, and 341,287
issued Chichester A. Bell and Charles S. Tainter. Similar cases were
initiated in 1897 and 1898. The selected items consist of the index and
affidavits by Edison, George E. Tewksbury, and Cleveland Walcutt from a
volume entitled Defendants' Papers in Opposition to Motion for Preliminary
Injunction.

Let 70.1 Box 34

United States Circuit Court,

SOUTHERN DISTRICT OP NEW YORK.

IN EQUITY.

AMERICAN GRAPHOPHONE CO. /

CLEVELAND WALCUTT i!T M.. ,

Defendants’ Papers in Opposition to Motion
for Preliminary Injunction. '

DYER & SEELY, •

, . Solicitors for Defendants.

RICHARD N. DYER,

SAMUEL O. EDMONDS,

• Of Counsel. ■

INDEX.

Thomas A. Edison (first affidavit).

Agreement botweon Edison and N. A. P. Oo. a

Lippincott - -

Supplemental Agreement between American Gi

phophono Co. and Lippincott . . ...

George E. Tewltsbnry . . . -----

License Contraot North American Co. and Ne

Jersey Co -

Thomas B. Lombard . . .

Ebon G. Dodge .

Cleveland Waloutt (first affidavit) . .

Agreement bet. N. A. P. Co. and N. Y. Phon

Herman Kustorer .

Lea Mondes . - . . -

The Telephone, &c., by Du Moneel.. .

Journal of Society of Telegraph Engineers.

1 „iic fe . ?•*

Augustus N. Sampson - .

Thomas A. Edison (second affidavit) .

Alfred O. Tate . . . .

Bobert L. Thoam'e . - .

Cleveland Walcutt (second affidavit) . .

Bichard N. Dyer - - - .

Bichnrd N. Dyer (second affidavit) . —

SOUTHERN DISTRICT OP NEW YORK.

Ambiiioan Grafhopiionb COMPANY J

vs. > Iu Equity.

Cleveland Walouti' ht al. I

Affidavit of Thomas A Edison.

State op New Jehbey, )

Comity of Essex, i '

Thomas A. Edison, being duly sworn, deposes mid

I lmve rend tlie affidavits of tlio complainant for use
on tlio motion for preliminary injunction, and believe
tliat they fnil to present a correct view of the situation.
Sp fai ns I know, there lias never been any recognition
of tlio validity of the grnphopliono patents on which
tliis suit was brought, nor has it over been recognized
thnt tlie matters set forth in those patents involvo in¬
ventions of merit.

Tlio attempt is made by these [intents to cover the
idea of producing the .phonograph record by cutting in
a solid substance, mid particularly by cutting the
record ill a wax or wax-lilni material, which is stated in
the patouts to be a mixture of beeswax and pnruffiue.
It is asserted that this feature made possible or
croateil tlio modern phonograph. But that is not tlie
fact. Aside from details in the construction of tlio ma¬
chines, making them more coveniont in use, which de¬
tails are not employed in the phonograph, tlie machines
described in those graphophono patents involve no ad¬
vance in the art. ,

At the time of my original work upon the phono¬
graph in 1877 and 1878, 1 used for the room-ding sur¬
face, not only tinfoil, which was pressed into a groove
by the recording point, but I used various solid resist¬
ing materials in which tlio records wore cut by tho
recording point. Among these lattor materials wore vari¬
ous waxes, including beeswax and parallino and mixtures
of the samo, and also various metals and compositions
aucl alloys of metnls. My tinfoil phonograph, however,
proved to he tho best at that time for tho particular
use which was made of it, mnnoly, for a loud-sounding
instrument which could bo used for exhibition pur¬
poses without listening tubes. I not only used Iheso
solid resisting materials to form the record, but I used
with them suitahlo sharp recording points— ohisol-
shape, knife-edge and otherwise— by which tho ma¬
terials wore out. Tho fact that I usod such materials
for tho- recording surface, and that in recording upon
them tho record was formed by tho removal of tho ma¬
terial, is Shown by statements in my early patonts and
oa vents. In my English Patent No. 104-1 of 1878, a copy
of which is appended, the statement is made that tho re¬
cording surfnoo may bu formud by coating paper or other
materials with pnrufhuo or other hydrocarbons,
waxes, gums or lacs, and that this may bo used

pressed by tho recording stylus when the foil was used-
alone, and consequently n sufficient body of paraffine
was placod on tho paper for that purpose. This is in¬
dicated by tho statement in tho English Patent that, in
recording on tho foil laid on paraffine, “ tho indentation
oaii now bo made in tho foil and tho paraffine." Hence
there was a sufficient thickness of paraffine to receive
the whole depth of the record, and when used without
the covering of metal foil tho record was made hy
ploughing a groove in the paraffine of greater or less
depth, according to the movements of tho recording
style. Tho word “ indentation ” was usod by me as
descriptive of tho waves of tho resultant record, -and
not ns indicative of the method of recording.

The use of wax and waxliko materials for receiving
phonograph records whioli are ent in producing tho
record, was nlso proposed by various other persons, in
1878 and 1879, including Lamhrigot, Cros and Cuhonol.
Lambrigot employed stenrine, which is a .waxlike
material; Cros and Cabouel employed wax. These
materials aro necossarily cut or removed in recording
upon them, and that without reference to tho shape of
the point of the recording style, but as a matter of
fact the form of tho recording stylo employed by mo,

and also bv tho other oxirorimentoi-K to whom T liavn

stylo. Honco, before this patent of Reynolds not only 17
hiul metnls, waxes and otlior inutorlnls boon suggested
us the recording surface, but it Imd also been suggested
that the sound vibrations eould bo used to produce tho
record directly or to control more energetic moans for
producing tlmt record. Reynolds adopted the second
plan of making the record and developed a special
machine in which tho record surfaeo would bo moved
with relation to a rotary cutter, the record being cut in
solid material, for which purpose ho profors tho metals,
but mentions any other hard material. The grnpho- 18
phono patents in suit simply adopt tho othor old method
of recording, namely, the operation of tho recording
stylo directly by tlio diaphragm, and apply that to tho
cutting of ono of tho old materials already known for
tho purpose. Tho form of cutter proposed by Rey¬
nolds which is not provided with teeth recoivos no
advantage from the fact that it is arranged to rotate,
and it might us well be stationary. With his smooth
edge cutter, therefore, Reynolds simply moves the
record against the cutter instead of moving tho cutter 19
aguinst the record ns is ordinarily done. The distinc¬
tions which tho first of tho two patents in suit attempts
. to dra'w over this Reynolds patent are not, it seems
to me, valid distinctions, in view of what I had already
disclosed by my patonts.

The difficulty I had in tho use of wax ns a recording
surface in 1877* and 1878 was that tho point became
■ clogged, as stated in my English putont of 1878. This
was due to tho softness of the wax employed. The
mixture of beeswax and paraffine referred to in tho 20
patonts in suit is subject to this same objection, and
the graphophonos which were first put upon tho mar¬
ket employed a soft wax, such as is described in the
patonts in suit, and were highly objectionable for this
and other reasons, and wore not in any souse practical
or commercial machines. The difficulty arising from
clogging is recognized by the patents in suit, and in
the second patent in suit the machine is provided with
a brush which is designed to overcome this difficulty.

with the facte. It le probably true that when 1 lenrnoc
jf the gruphophono I gave more time to tho oxperi
ments on tho phonograph and prosecuted them witl
greater vigor than I would otherwise have done, but '
had thou for some time been conducting experiment
looking towards briugiug out a commercial form of tin
phonograph, and had been using, among other things
waxes and compositions of waxes for the rocording
surface.

When the grapliophono was placed upon tho market
it was not a successful or commercial machine. . Tin
phonograph, which was placed upon the market#at tin
same time, was u better rauchiue than the grupho
phone, but was not, in my opinion, a commercial o
successful muohine. I had invested a considerubli

tor of the record produced. I had experienced
same difficulty witli the use of waxes in my eurlj
periments, but I did not know the renson for tho
culty, and I bad expected to overcome it by impi
ments in the mechanism of tho machine. When, 1
ever, bpth the gruphophono and phonograph prove
be commercial failures, I undertook tho elaborate
ries of uxporiments rofurred to with a view of imp
ing the phonograph and making it commercial,
real cause. of the difficulty was not ut that tiino kn
either to myself or to anybody elso, so far as 1
aware. I conducted tho experiments by modifying
improving the various dotails of the machine, ant
peoially of the recording and reproducing devices
the parts immediately commoted therewith. Iu
oourso of those experiments I also attempted to e
inate tho scratching and other foreign sounds w
wore apparent, iu the reproduction of the records
hoped by tho elimination of these foreign souuc
better reproduce the sibilant sounds, and hence r
the articulation dearer, and perhaps to reach the
trouble. In this line of experiments I tried and
liuudrods of mixtures of waxes and waxlike matoi
keeping several men constantly employod in prepi
tho compositions and molding the cylinders unde
direction. The oylindors were tried by mo persoi

Having reached tlmt conclusion and de
oil its accuracy to my satisfaction, I procoedei
aaroh for still harder materials, and iinall;
soap, which is covered by my patent Nc
copy appended), and that material has re
o the present day tlio recording material fo
lograpli.

tly the Grnphophono Company has greatly im
he grnphoplioue by the use, either of cylin
lo by the Edison Phonograph Works for th
ipli, the graphophones being provided witi
iperiug mandrels to receive them, or of cylinder
the Grnphophono Company in imitation of tli
ipli oyliudors and composed of an exceeding)
serial wliicli I believe to bo principally soar
s covered by my patent No. 430,274 ; and nol
dim? the fact that bv its contracts the Granin

iUU.MU (copies appended) aud oth
and patented by me.
allic soap, wliicli is the recording m
nogrnph, is in a sense a wnxiiko mi
r the facts wliicli I have stated,
scientific or practical equivalent i
of booswax and pnralHne referred to i
it.

pli oyliudors nro not only made i
i my patent No. 430,274, but they ai
one solid piece of that material, r
mt No. 382,402 (copy appended), tli
g coated upon a foundation of pape
latorinl, and tlio special form of cylii
y adopted is that having an intorm
with my patent No. 414,701 (cop
features of these pntents Nos. 382
ire also used in record cylinders whio
y introduced for use with the grapho

lylindor mnde wholly of a wnx-lik
ificant of the charadter of the cyl
ion cylinders are made as describe!
no patents here in suit, by coating i
a wax surface, the wax must bi
flexible : otherwise, when it cnnlo nftn

inherent in the cylinders which me described in the
graphophone patents iu suit. The use of a paper
foundation makes it necessary that the wax coating be
thin and relatively soft and flexible, in order to with¬
stand the difference iu tlio rate of expansion of the wax
and the paper, and such is the coating described iu
those pntonts. Hard rubber has a rato of expansion
several times greator than paper, and yet the hard wax¬
like materials which can bo successfully employed
cannot bo moulded npou it without crackiug, since they
have a still greator rato of expansion. The phonograph
cylinders now iu use, being made wholly of soap, are
not destroyed by any change in temperature.

With .regard to the recording tablet which is made
the subject of the second graphophono patent here iu
suit, I wish to call attention to the fact that the
phonograph cylinders are made of a soap, and
and do not consist, as does the tablet iu the grapho¬
phono patent, of a hollow cylinder or tube of paper or
other similar materiul upon which wax is coated,
nor is the surface one made of a mixture of beeswax
and paraffine. I wish also to call attention to the fact
that various forms of recording surfaces, including
rollers and cylinders, are described in my early patents,
my English patent of 1878 stating that “ the phono¬
gram may be in the form of a disk,, a sheet, an ondless
belt, a cylinder, a roller or a belt or strip.”

A sample pliouograjih cylinder is submitted here-

markot by the North American Phonograph Company
simultaneously and under contracts providing that cus¬
tomers should bo allowed to seleot either machine; In
this way a considerable number o'f phonographs and
graphophones wore introduced, but the graphophone.
began to be immediately thrown back upon the hands
of the North American Phonograph Company until
they wore nearly, if not ipiite, all replaced by phono¬
graphs, and tlio North American Phonograph Company
found it impossible to introduce the graphophone.
Under Mr. Lippiucott's contracts with the Grapho¬
phono Company ho bought a large number of graplio-
Xihones, some three thousand as I now remember, and
paid the Graphophone Company upwards of two hun¬
dred thoiisuiid dollars for the machines, but they were
so worthless that these machines wore eventually all
shipped to tlio Edison Phonograph Works and were
thero thrown into scrap.

Another proof of the failure of the graphophone is
furnished by the experience of the International
Graphophone Company. That company purchased the
graphophone patents for England nud other foreign
countries, and undertook to do business with the
machine described in' those patents. Uuder a mis¬
understanding as to the practical character of the
graphophone the International Company paid, ns

other half, the factory ulreudy established in this coun¬
try was given np, several hundred graphophonos which
had beon manufactured, or partially manufactured,
were sent to the Edison Phonograph Works at Orange,
N. J., and there turned into scrap, involving a loss of
many thousand dollars, and the United Company be¬
gan to use phonographs manufactured by the Edison
Phonograph Works, and lias continued to uso suclf
phonographs exclusively down to the presont time.

With regard to the arrangements with Mr. Lippin-
cott which are set up in the moving papers ns consti¬
tuting au acknowledgment of the validity of the graph -
oplione patents, and of the merit and originality of tlie
alleged inventions covered by said patents, I do not
think that such arrangements furnish any warrant for
the conclusion wliiuli is sought to be drnwu from them.
Mr. Lippinoott was interested' in the graphophouo and
had the exclusive right to exploit it. At the time he
uequired those rights he did not know of my perfected
phonograph, but soon after that time, I having opened
an office in New York City for the sale of mankinds, lie
saw my machine, and, recognizing its superiority over the
graphophouo, he desired to acquire the right to handle
it. I had already made arrangements for the exploita¬
tion of the phonograph when Mr. Lippinoott opened ne¬
gotiations with me. Ho was obliged to secure the con¬
sent of the Gruphophoue Company on account of his

Mr. Lippinoott has either aotnully puid royalties or
which have been or should have bcou included in
royalty accounts rendered by the Grnphophone Com¬
pany against Mr. Lippinoott before the date of his
assignment.

Further than this, all phonographs and all phono¬
graph supplies now on tho market were munufuuturcd
and Bold by tho Edison Phonograph Works in accord- 60
mice with contracts by which tho complainant tho
American Grnphophone Company acknowledged the
right of the Edison Phonograph Works to manufacture
and sell such instruments anil supplies.

The contract situation is a complicated one, and in¬
volves many dooumonts ns well as many agreements,
evidenced by the uourso of business in which the
American Graphophouo Company acquiesced aud from
wliiali it profited. On August' 1, 1888, ah- agreement
was entered into botwoen iuysolf, the North American 61
Phonograph Company nud Jesse H. Lippinoott, n copy
of which is hereto aunoxed, in which iny right to muuii-
faoture phonograph aiid phonograph supplies is acknowl¬
edged, aud in which it is. provided that the phonograph
and the grnphophono (tho latter pulled the “ phono-
graplngrapliophoue), which wore to be put upon the

tion was based. That use was the replacement of the
stenographer in commercial houses, in tho work of pro¬
fessional men and tho like. With both of tlioso in¬
struments the umount of matter which can bo plneod
upon one record cylinder is limited to a running
time of a few minutes. Further, and more im:
portent, is tho fact that oven with tho approximately
perfect urtioulation winch I have succeeded in ob¬
taining in tho phonograph, tho sounds are weak,
and ■ listening enr-tnbos lmvo to bo employed.
There are also numerous other defects which must bo
remedied. For these reasons the effort to intro¬
duce tlie most porfootod phonographs for use by
commercial and professional men for dictation purposes
has been practically abandoned, and the present uso of
such instruments is almost wholly for umusoinout pur¬
poses in the reproduction of musical nnd other records.
In 1877 nnd 1878, 1 believed that nil instrument whioh
would give a loud reproduction, audible through¬
out a room, was essential to thorough success, nnd I
still believe so. The limited extent to whioh tho
phonograph 1ms boon introduced is largely due
to the adoption of the business idea that an in¬
strument which would have to be listened to with
enr-tubes would lmvo a certain extent of uso. Had I
cared to tako advantage of that limited field in 1878,
some of the instruments I then had would have boon
quite as satisfactory ns wore tho first phonographs nnd
graphophones put upon the market in 1888, but I wns

records are reproduced, tho sumo quality and ap¬
proximately the same volume of sound as the original
rendition.

Thomas A. Edison.

Subscribed nnd sworn to be- 1
fore mo this 6th day of [>

December, 1894. )

T. H. Smith,

Edisou, N. J.,

[ seal. | Notary Publio,

State of New Jersey.

UNITED STATES CIBqUIT COUBT,
Sobtheiin Disthiot of New York.

ted November 15, 1888. Prior to that date, 1
iisiderable time in Now York City, conducting
tintions which resulted in. that contract, and
iarly as 1888, down to the signing of the Kan-
net, I was in frequent consultation with Mr.
Lippinoott and the various persons who were
ime intoiested in tlio talking muchiiie business.

graphophono patents including the patents iu suit,
whioli, as was represented and generally understood,
became the agent of the complainant . company, arid
exclusive licensee under its patents. Ho subse-
intly, with the eonsoiit of the Grnphdphoue Oom-
ly, made oontraets with the owners of the : Edison
mograph patents, whereby the business, of; ex¬
iting both the phonograph and the graphopkone
i to be carried forward as a single business. Ho
anized the North Ainerienn Phonograph Company
the purpose of exploiting said business, transferred
rights to that company, and organized various local
ipnnies, and issued to them liconses by whioli they

. I attaoli hereto a oopy of the license contract of the
New - Jersey Phonograph Company as showing the
rights of that company, and as an exnmple of the char-
actor of contract whioli the other local .companies re-.

. These contracts were all made for a period of five years,
with the privilege of. extension, and wore in all in¬
stances, so far as I am aware, extended to March 26, 114
1908, and are now in force. The licenses of the Kan¬
sas and Now Jersey companies were, in fact, extended
to .tlio last-named date.

- The business. was first carried on by the locar com¬
panies by renting tlio machines to users, but subse¬
quently, and in accordnuoe with the contracts, the local
companies were given the right to sell machines and
supplies to the. public.

■, The phonographs now owned by the United States
Phonograph Company mid used by that company to 116
make musical records were purchased by the United
States Phonograph Company from the Now Jersey
Phonograph, Company, and are used by the former
company with tlio knowledge and consent of.. the latter

which latter ia one of the local companies which ac¬
quired territorial rights from the North American Com¬
pany, in the same manner as in the case of the Kansas
and New Jorsey Companies. Said Easton is praoti-
oally the mnunger of both said Gruphophouo Company
and said Oolmubia Company. He is lnrgply interested
in both, and the interests of tiio two companies are un¬
derstood to be practically identical. Ho 1ms known, of
the operations of the United Statos Phonograph
Company ever since its organization, 1ms dealt with it
very largely in the purchase of phonograph records,
an;l never, until recently, has lie seriously iutinmted or
suggested that our business was carried on without
proper authority, or that the inuchinos licensed to be,
used and sold by the New Jersey Company, and
wliioli we obtained from that Company as'statod,1 wore
in violation of auy rights hold by the American Grapiio-
pliono Company, of which, as I have said, he is an ollicer ;
or that the licensed use of said machines did not in¬
clude the right- und license to make, uso and sell
musical and other records on blauk cylinders,
which right constitutes the essentially useful olement
of suoh machines.

On the contrary, for a long time past, said Easton
has very frequently visitod our laboratory, and his two
companies, the American Comnauv and the Columbia

regarded all over the world as having originated the only
commercially successful phonograph. This is generally
concedod and is regarded as beyond dispute. Until
a short time ago .the Ainerioau Grapliophone Company
was utterly unable to plaoe upon the market a graplio-
pliono capable of accomplishing commercial and. useful
results. The machine which they are at present put¬
ting upon the market overcomes the difficulties hereto¬
fore experienced only ho faros it employs the practical
features of the phonograph which. they have adapted to
the grapliophone. This, as I have intimated above; is
the feeling prevalent among those connected with this
.business, and the fact that the grapliophone is incapa¬
ble of.praotioal commercial use is demonstrated by the
fuct that at the present time there are comparatively
few graphdphones in use, while phonographs in large
numbers have been sold all over the world.

Until very recently it has boon conceded by the offi¬
cers of the Grapliophone Company that the grupho-
plione was not an operative and successful device, At
, the Seooud Annual Ophvontioh of Local Phonograph
Companies of the United States, held in New York in
June, 189i, James G. Payne, then president of the
American Grapliophone Company, was called upon for

Although the phonograph litis been 'upon tlio market
for a number of years past, it lias only' been within the
last year or so that the American Graphophono Com¬
pany, by absorbing in its maohino various features ; of
the phonograph ns aforesaid, Inis been able to place
upon the market a device sueli as Col. Payrne referred to
ns a machine that con.be offered - “ to; local ; companies
or agents with some assurance of success." One of the
126 leudiug difficulties vvhioh precluded the successful oper¬
ation of the graphophone prior to this time wns that it
employed a recording cylinder of soft, waxy material.
This cylinder and the recording and reproducing stylos
used in connection therewith wevoihciipnblo of perform¬
ing their respective offices satisfactorily. Not only was it
impossible to record nnd reproduce tho hissing and labial
sounds, but said styles, whioh were constructed of '.steal,
were rapidly worn down or dulled, and in addition wore ;
so injuriously affected by the moistnro both in

phonograph. It is true that for over a. year lost past,
tho American Graphophone Company hns carried on
experiments with a view to manufacturing a blank , for
tho graphophono capable of the use to which the blank
of: the phonograph is put, but; so far as I; am aware,
they have not- been successful. During my dealings, as
an officer of the United States Company; with said
Edward ; D. Easton and the American Graphophone
Company, those cylinders have been regarded ns in¬
capable of practical use for making musical and other,
exhibition records, for. the. reason that in the most
approved form the notion of the atmosphere upon the
blanks; was to cause, a bluish-white inorustationbr-mold
to appear upon tho surface, which soon destroyed the
perfection of the record. This difficulty with the.
Graphophone Company’s cylinders hns been recognized

133 Columbia Pbouograph Company illustrates our. positioi
iii tins connection : .■

" We are reluctantly compelled to cancel our nr
rangomeiit with you in so far as it relates to the uocept-
auco of Grnpliopliouo blanks in. part payment. W <
will leave the price ns we agreed, and we do not tliint
that yon can consistently ask us to accept a produol
which we know to be inferior and detrimental to. our.
trade. Wo have now worked up all ' the blanks received
from the Grapliophone people, or.cept the 11 returned
131 for your inspection.

“ Wo appreciate your anxiety to put us right in this
rnattor by your instructions that wo should return all
records inado on Grapliophone blanks not found satis¬
factory. We to-day ship you 140 oroliostras. Wefind
the Grapliophone blanks get worse with age instead of
bettering, and this of itself should indicate to you • that
there is something wrong in the composition or ilt
preparation." , ^

Iii acknowledgment of this letter, Hr. Easton wrote,
135 on May 12, 1804:

“ Until further advised, wo will, if ngreeiiblo, con¬
tinue onr record arrangement, giving you Edison
blanks.”

Thus, ns late ns May of the present year, the
American Graphoplioue Company acknowledged its
inability to dovise a practical record blank for the
graphoplioue.

As illustrating earlier efforts miide: to dovise blanks
equal to the Edison product, the Amoricnn Grapho-
13G phone Company, hi 1893, obtained front us for the pur¬
pose of making these cylinders, a quantity of wbat we
termed ‘‘scrap wax,” and which consisted of fragments
of Edison cylinders which had been broken during the
process of providing them with records. This . “ scrap
wax ” was forwarded by us to the Bridgeport factory of
the said Grapliophone Cbmpnny, and there, I am iu-
■ formed and believe, was mado up into new cylinders. '

The inability of tlio American Grapliophone Com¬
pany to supply u practical and", commercial blank' for

■■ - .v.: .^1 ..'i„ ■

use upon either the phonograph or grnphophne con¬
tinues to the present day. It is not even now oapable
of supplying the trade; and, therefore, to preclude the
users of these machines from employing the Edison
blanks would practically throw the whole talking ma¬
chine enterprise to the ground.

• Geohqe E. Tewksbury.

Subscribed and sworn to be- )
fore me this 6th day 'of V
, December, 1894. ^

Eugene Conean,

[seal.] Notary Public,

Kings it N. Y. . Counties.

IN THE UNITED STATES CIRCUIT COURT,

American Oraphophone Company

In Equity.
'No.

: Cleveland Walcott :

Affidavit of Cleveland ‘Waloutt.

State of New York,

City mid County of New York,

Cleveland Waloutt, being duly sworn, deposes and
says : I am 82 vonrs of nge, reside in Now York City,
and am a member of the firm of Waloutt, Miller & Co., 251
' lalera in talking machines aud supplies therefor. I
is associated with Mr. Jesse H. Lippincott prior to
e organization of the North American Phonograph
mipany in July, 1888. At that time I became the
lad bookkeeper aud cash ior for that company, and snb-
quontly became the secretary of the compnny, whioh
tter position I held until the company went into the
rods' of a receiver, in August last. At that time I or-
•nized the firm of Walcutt, Miller & Co., and pur-
iased und continued a certain department of the busi- 262
iss of the North Amorican Phonograph Co., in whioh
isinoss I am now engaged.

From the positions I occupied in the North Amori-
u Flionogrnph Co., I am well acquainted with the geu-
al history of the business of that compnny, and par-
mlarly with the accounts which appenr upon the books
that company..; I established for the . North Aineri-
n Phonograph Co. a system of keeping an account of
o movements of all the maohines owned by that

Urnpnophone Co. to periodically render accounts
against Mr, Lippincott, including items for these royal¬
ties, upon the phonograph, nnd un account was kept on
the books of the North American Phonograph Oo.,
with the American Graphoplloue Co., showing tho itoms
and totals of the bills so rendered, and paymouts were
made nprin this account to the American Graphophone 268
Co. by the North American Phonograph Co., through
Mr. Lippincott, sometimes by the cheok of the North
Amoricau Company made to the American Grnpho-
phono Company’s order, and sometimes by Mr. Lippin-
eott’s cheok mndo to the order of the latter company.

By iin examination of this account on the books of the
North American' Phonograph Co. , I find that tho Ameri¬
can Graphophone Co. was so paid $285,074.90, of which
amount $42,795.68 wus represented by notes of Mr.
Lippincott, and the balanco was paid in cash. On 269
Muy 13, 1891, the American Graphophone Co. returned
to Mr. Lippincott $31,069.76 of tho notes, by a letter -
stating that they had taken back in payment of the
notes a certain number of. grnphophones. These ma¬
chines had been billed, hilt hud never been actually
delivered.

On April 30, 1891, or ivithiu a few days of that date,

organized by Mr. Lippincott for the purpose of exploit- 206
ing the business of lousing and selling both phono¬
graphs and grapliophones under the patents on both of
those machines, his rights undor both sets of patents
being assigned to that company. Local or sub¬
companies wore organized in various parts of the
country, upwards of thirty in number, and to these
companies were given exclusive licenses under both
sots of patents (including the patents in suit) for lim¬
ited territories. These licenses were all extended up
to March 20, W03. I have read the contract of the 260
New Jersey Phonograph Company attached to the
illiduvit of George E. Tewksbury, given for the defend¬
ants in this cnso. That contract is an example of the
contracts made by the North - American Phonograph
Company with local or, sub-companies. All such con¬
tracts wore substantially alike in their terms. The
Now York Phonograph Company, hereinafter referred ’
to, received and oporated under a contract of this same
diameter, At first the machines were shipped to the
local companies, and were to bo had on lease, but 207
subsequently the local companies wore authorized to
sell the machines. These business arrangements made
by Mr. Lippincott through the North American Phono¬
graph Company were well known to the officers of the
American Gmpliophouo Company, and the Amer¬
ican Graphoplioiio Company received a share of the
profits arising from the business so organized and con¬
ducted.

In my relations to the phonograph mid graphophone
business us employee and officer of the North American 268
Phonograph Company, I became acquainted with the
relative merits of tho phonograph and graphophone ns
they were .put upon tho market by the North American
Phonograph Company. The contracts with the sub-
companies required euoli of such companies to offer
both the phonograph and the graphophone to the
public ‘‘ with absolute impartiality, leaving the person
or persons with whom it is dealing to make his or their
own selection," and further provided that the sub-

1 n' /t A . "t 1

oro Jimmy snipped to Hie Edison Phonograph Work
lioro they now are, so far ns I know. Tl.oso graph,
10, ms which were so put out by the I o 1 Amenta
lionograph Company and wore rotnrnod to it as m
nnmorcinl, nnmbored some 3,000 machines, for whie
o North American Phonograph Company paid th
mericnn Gmphophono Company, through Mr. Lippiu
tt, upwards of §200,000. Since the phonograph wn
e only machine which the public could bo induced l,
o, it became necessary for the North America,
louogrnph Company to continue its business ox
isively with the phonograph, and no grnphophono,
re shipped or put into use by the North America,
Company after an early date in the history

rim firm of Waleutt, Miller .t Co., of which II, o do-
",,s °rg'uiizo'1 i„tt0r P„rt
August, 18J4, for the purpose principally of tnkiuo

r^“£ui,*«:ho '—°f

oh 1,7 1 H1 7 f°r exl,“,it'° I -I o es
ic i had been theretofore carried on by the North

lines which hail boon used for several years by the 273
orth American Phonograph Company, and wore a part
f the machines which, ns I have already stated, were
lipped out to local companies on rental prior to Feb-
lury 1, 1891, nud had been ' returned to the North
(Muerionn Phonograph Company iu the process of loas-
ng, ro-lonsiug and selling machines.

The North American Phonograph Company wont •
nto the hands of a Receiver August 21, 1891. A short
dine after that date, the firm of Waleutt, Miller & Co.
lutered into negotiations with the Receiver to purchase 271
lio plant at No. 120 East Fourteenth street, and the
supplies and records thou on hnud, with a view of oon-
inning that department of the business, and on Sop-
ember S, 1891, the sale of such pluut to Waleutt, Miller
fe Co. was consummated by a bill of side from tlio
Receiver, given under the order of tho Court, and
since said last nauiod date the businoss has been con¬
tinued by our firm. All tho members of our firm were
formerly connected with theNorth American Phonograph
Company, and wo have continued this branch of the 275
business of said North American Company, doalitig
with the former customers of that company.

, Tho machinos we use in our busiuess are the identi¬
cal machines which wo thus purchased, and which had
been used for the same purpose by the North Amorionu
Phonograph Company and tho Rocoiver for several
yours, and no others, and ure and wore machines upon
which royalties woro either actually paid to the Ameri¬
can Grnphophono Cotnpnny by the North Amuricuu
Phonograph Compauy, or upon which such royalties 276
wore payable, prior to February 1, 1891. At tho time
of making this purchaso, there wore included iu tlio
purchase a stock of blnuk phonograph cylinders, which
we have used in making records, and since that date
such cylinders as we .have purchased have been pur¬
chased by us from the Receiver of the North American
Phonograph Compauy. ' We have nlso sold a number
of phonographs and some blank phonograph cylinders,

foiled to by me, namely, suoli ns woro originally soul
out by tlie Noi'th Amoriviin Phonograph Company prioi
to .February 1, 1891, anti upon which royalties wore
paid or payable prior to that ilato.

In onr dealings with the Boceivor of the North
American Phonograph Compnny, said Boeoiver has not
only noted on behalf of that company, but has also

278 acted on behalf of, and as agent for, the New York
Phonograph Company, a compnny which is liconsod
under both the gmphophono and phonograph patents
ami for tho entire Stnto of Now York, including the
City of Bow York. A copy of the contract croating
the tortb American Phonograph Company the ngont
of tho Bew York Phonograph Company is attached hero-
“""‘l ":“rkfd “ Exllibit A" ‘he same being dated July
1, 1893, I hat contract was operated under by tho North

370 • P1,<T«mPh Coi»P»».V, »nd subsequently by

279 the Boeoiver. I understand that tho Now York Phono¬

graph Company attempted to cancel said contract in
Octobor or Noremher, 1894, and subsequent to tho sale
b ri5’ fch° Boi!elvor Walcutt, Miller & Co.,

b t hat the Becoivor has never assented to or recog-

^chcancellatmnand has continued since said
tc to do business under said contract by selling
Jonograpbsand supplies in the State J City of

80 *£$£££? P"rt8, 0f #**V*1** blanks !

-r«£ zU": ssn- -i -

sold With full authority from the Boceivor ofuieNorth

«“= °-r* -*■

Legal Department Records
Phonograph - Case Files

Columbia Phonograph Company v.

National Phonograph Company and William J. Rahley

Columbia Phonograph Company v. John E. Whitson and Walter J.

Whitson and the National Phonograph Company

This folder contains material pertaining to two suits brought by the
Columbia Phonograph Co. against the National Phonograph Co. and two of
its agents, William J. Rahley of Baltimore and Whitson Brothers of
Washington, D.C.The Rahley case was heard in the U.S. Circuit Court for the
District of Maryland; the Whitson case, in the Supreme Court of the District
of Columbia. Both cases were initiated in April 1901 and involved territorial
sales rights. The selected items include the bill of complaint and a summary
of docket entries for the Rahley case, along with correspondence regarding
the progress of litigation in both suits. Among the documents not selected
are briefs and other materials pertaining to the subsequent appeal of the
Whitson verdict by the National Phonograph Co.

IN THS CIRCUIT 00 'JUT OF TH2 UNITS!) STA'*Ff!
For -the District-of Maryland.

COLUMBIA' PNONOOitAFN COMPANY

VfJ» IN SyjlTYi

NATIONAL P5iONOOIiAP.il COMPANY
Und YXLLXAM «t. iiA?u,gY,
individually and as agent
Of said NATIONAL PHONO ChA^N
00MPA5IY.

TO TH3 HONORABLE T5IB .TUD0S3 OP wig 0‘
OF THE. UHITBD TiTATPS FOrt TK3 BSSTJilC!

COUNT

Tho COLUMN IA PHONOGRAPH -COMPANY, a ooyporatlon' creat¬
ed and ax toting under and ijy virtue of the laws of «w-
Stata of Ueat Virginia, and having its principal office
in the city of Washington, District of coitwhia,- tarings
t3iic its 5) i’ll of complaint against t ho NATIONAL )UhO!<0 GRAPH
, CO/ip ANY, a M*w Jrsrsoy corporation, and UILLIA.M j. rahlsy ••
tndivitfially and as agent or tjjo said national :u!0H0 graph
COMPANY, a oitisen of the State of Maryland, Doth of the
aa.i.d defendants haying a regular and ostnol.iehed place of;
buotnoas at Ho. 577 North Guy n toast, Baltlaoro, Maryland,
y tthin the said District. of .Maryland.

And t?iereupon yens orator complains and says:

-1-

^hat heretofore and by- virtue of certain .agr'cements
in totthig diUy executed and delivered, arid' dated respect-
iyoly Oct. as, 1087, Jdne 88, 1888, July .17, 1888, ;uvi
Aug. 1, 1888, there r or e fully and completely vested' in a

Jaraey corporation known as the North American Phono-' -
graph, .company, trie entire title, ownership end' control 'of /’p '
in and to , certain. phonograph inventions made by One Thpmas • • '■'%

A. Edison, then and no?- of the state of New Jersey, and
of, in end to all istters-patont of the united states
therefor already granted or that might be obtained there¬
after for any phonograph invention produced by the said
Edison v/lthin the fifteen years ensuing from the date last
aboyo mentioned, — ay by roferenoe to the seyeral instru¬
ments above - mention <3d or duly authont touted copies thereof,
here in court to be produced, w ill more fully and at large
appear.

That thereafter, by an instrument in writing duly
executed and delivered on June l:>, 1889, the auid .’forth
American Phonograph company transferred and assigned to
your orator the complete and exclusive right within the
States of Maryland and holawure un-i' within the District of
Column-la to use and let to others to use nil phonographs
•and phonograph supplies, ?/lth further- provision for corn
"erring selling-rights also to your orator at some time in

the fit’. ire, - the duratio.n of said exclusive rights thus

granted to your orator being until March 28, 1905, and.
after that during the life of any such Edison phojiograph
patent to bo obtained as aforesaid,— —an by roforenoo to
s-iid agreement or a duly authenticated copy thereof, here
in Court to be produced, will more fully mid at largo
appear. And that thereafter, by action of said north
Asm-loan Phonograph company taken on bee. 3, 1890, the
selling-rights above indicated were conferred upon your
orator; and thereupon your orator by virtue of the prei.t-
ises became vested with the oit.ire and exclusive right to
uae and let and sell and deal in phonographs and phonograph
supplies throughout the territory aforesaid, to wit the

States of Maryland and Delaware. and the District of colum-
Wa, and until March 26, 1903, and after that until the
expiration of al;l patents granted fbr phonograph inven¬
tions produced by said Sddson prior to Aug. 1, 169s.

Shat all the conditions and aots required to ho done
and performed to yeat in your orator its aatd exclusive
rights and privileges under the various eon tracts and
agreements aforesaidj have heen duly executed and perform¬
ed; and all considerations therefor haye heen .fully and
duly paid and carried out; and the exclusive rights of
your orator w ithin the territory aforesaid have always
hitherto heen recognised and acquiesced in hy the puhllo
at large and especially hy the said North American Phono¬
graph company ard by the said National Phonograph compare
( named as a defendant herein), its accessor in the phono-
gravjv. businesss, with the exception noted in the ensuing
paragraph.

-4-

Shat, owing to the threatened invasion of your
crater's said exclusive right.s, your orator on March 9,
1893, filed its bin of complaint in the supremo court of
the District of Columbia against said North American Phono¬
graph company and others, praying that the defendants in
that suit he enjoined from directly or indirectly using
or ‘selling or dealing in phonograplhs or phonograph supplies
within your orator's said exclusive territory; that an
e x parte restraining order was granted against the said
defendants; and that, after hearing both sides, on March
31, 1898, his Honoa Judge COX handed down an opinion re.tuo-
ing to vacate said restraining order and sustaining your
orator's said exolusiye rights and ordering that an in-

Juno Won Issue; and that a perpetual Injunction in con¬

formity therewith was afterwards entered in the said calise

and still remains in full force and effect*— as by refer¬
ence to said hill of complaint and said opinion or duly
authenticated copies thereof, here in court to he produced,
will more fully and at large appear.

And your orator further shows upon information and
belief that the said NATIONAL PHONOGRAPH COMPANY, nimed
a-s a defendant herein, is successor in the phonograph busi¬
ness of the said North American Phonograph company, and is
bound by the contracts and agreements of the latter; that
it is the sole and exclusive soiling-agent for all phono¬
graphs and phonograph supplies manufactured in accordance
with the said Edison phonograph invontiono and under the
said Edison phonograph patents; that allphonographs dis¬
posed of by said defendant bear a serial number and, to¬
gether with all phonograph supplies put out by it, are
furnished only to authorised dealers who are by said defen¬
dant repaired to sign a "dealer's contract" obligating
themselves not to dispose of the same to persons not
approved of by said defendant, or at prices other than
those fixed by said defendant; and that the said defendant
doo s not sell its said phonographs outright, but .in con¬
nection with a license^ agreement under which it retained
a certain control of the same,— whereby the said defen¬
dant NATIONAL PHONOGRAPH COMPANY koeps track Of ail
phonographs and phonograph supplies put out by it, and
becomes responsible for the presenoe of the same, and of
any specimen of the same, within any territory.

-B-

And now your orator complains that, within the past
six years and before tho execution of this bill of com-
plaint, tho said NATION Ah PHONOGRAPH COMPANY and tho said
WILLIAM J » RAHL3Y individually and. as agent for tho said
NATIONAL PHONOGRAPH COMPANY, conspiring together have vio¬
lated your orator’s said exclusive rights, by using and
causing to bo used, soiling and causing to be sold, and
offering for sale and otherwise dealing in and handling
phonographs and phonograph supplies, within tho city of
Baltimore aforesaid and elsewhere within your orator's
saddi exclusive territory, and without your orator ' sponaent,
but contriving together to injure and defraud your orator*
and to deprive it of tho profits which it otherwise would
obtain; that the said dofondnnts still continue so to do,
and are threatening and prepur* g to continue their afbro*
aaid unlawful acts to a still grfjater extent; and that they
have derived and received great gains and profits by reason
of their unlawful acts herein cojspiained of, but to what
istent your orator is ignorant and therefore prays a 'dis¬
covery thereof*

-7-

And your orator further shows unto your Honors that
this suit is a controversy between citizens of different
States, the complainant being a citizen of the State of
West yijginia, and the defendants being citizens of the
•State of Hew Jersey and Maryland, respectively; and that
the matter in dispute exoeeda, exclusive of interests and
costs, the sura or ynlue of Twd thousand Dollars {$3000. )

Arid your orator further shows that, inasmuch as
the said NATIONAL PHONOGRAPH COMPANY is a foreign corpor¬
ation, toeing a creation of the laws of the state of New
Jersey, your orator may not toe utole to obtain servioe
upon said defendant; and your orator therefore prays that,
in such event, this oauoe may continue against the said
WILLIAM J . NAHLNY, and that this Honorable court will
uphold your orator' e rights in the premises against the
said defendant WILLIAM j. HAHLBY.

Inasmuch as your orator can have no adequate relief
save in thi3 Honorable court, it further prays;

(1) That these defendants and each of them may toe
restrained toy a writ of injunction, issuing out of and
under the seal of this Honorable court,, enjoining thorn
a nd each of them and their attorneys, agents, servants,
clerks, employees, dealers, associates, successors and
•assigns, from directly or indirectly using or. causing to
toe used, or selling or causing to toe sold, or letting or
causing to be leased, or offering or causing to too offered,
for sale or to lot, within tho States of Maryland an?. Dela¬
ware and within the District of Columbia, any phonograph
or phonograph supplies;

(3)b That a preliminary injunction and also a tem¬
porary restraining order, to the same purport^ tenor and
effeot as hereinbefore prayed for with regrd to the per¬
petual injunction, may toe issued in favor of your orator;

( * > ‘ ,J-’riat trie said defendants and each of them rasy
be. compelled to aooount to your orator for their profits

and that this court

obtained by their : sa. Id unlawful aots,
may assess or cause to .toe. assessed the damages likewise
incurred by jour orator, and will oo.npol the defendants
and each of them to pay to your orator not only the profits
so acoo.mt/'W but also the damages bo assessed; and

(4) SJhat these defendants may be ordered to pay the
costs of this proceeding, and that your orator may have
euoh other and further relief as the equity of the case
may require.

5-0 the end, therefore, that your orator may have the
relief hereby prayed for and that those defendants may, if
they can, show why your orator should not have such relief,
and that they and each of them may make a full disclosure
and discovery concerning all the witters hereinbefore
a llqged, and may full, true, direct and perfect answer
make (answer under oath not being waived) to the best and
ut?ocst of their respective knowledges, informations,
remembrances and beliefs, to the several allegations in
this bill contained, in as tail end particular a manner
a s if the same were repeated paragraph by paragraph and
e ach of said defendants thereto severally am specifically

interrogated, - may it please your Honors to grant to your

orator the writ of subpoena ad respondent, issuing out
of and under the seal of this Ho>l0rabie court, and directed
to said defendants, HAEtONAL PHOHOOBAPH COHPAJIY ahd WILLIAM
J. RAHLfflT and each of them, commanding , them to appear and
make answer to this bill of oonplaint and to perform. and

abide by siioh orders and decrees herein as to thin court
may aeemjust.

STATS OP HEW YOHX,

County of’ Hew York, ss. :

SDWASM a SASTOH, being first duly sworn, looses
and days that he in President of the COLUMBIA PHONO OHAPH
COUP ANY, named as complainant in the foregoing bill! that
he ha a read the sains and Knows the contents thereof, and
that the same is tnio of hie own knowledge, save ns to
the matters therein stated to he alleged upon information
and belief, and that as to those matters he believes it to
be true; and that the seal affixed to said bill is the
oorporate seal of said complainant, and was by him affixed

P 3%,.,v£ Str/tfr'rK

(/mts&ffiiceel/

£4£S&&*tS0k ^

^a/$j?W'4,y/t(6 April, 3rd., .1901.

Howard IV. Hayes, Esq.,

765 Broard St.,

Newark, N.J.

Dear Sir:-

The Columbia Phonograph Company docketed suit in the United X
States Circuit Court today against the National Phonograph Company, and
William J. Rahley individually ^and as agent of the National Phonograph
Company .

As soon as the papers were left with the Clerk we were notified.

Judge Morris is out of Town, and the papers will not be served untili
his return on Friday or Saturday, so the Clerk informed us.

The Bill is for injunction, and they ask for preliminary in junction, and
restraining order. With the Bill are filed affidavits by Easter, President
of Columbia Phonograph Company, Brandt the Local manager, and the Assistant
Local Manager.

Also copies of agreements between North American Phonograph Company
and Easter/ and the decision of Judge Cox, in the United States Court for
the District of Columbia. Shall we enter our appearance for the National
Phonograph company and William J. Rahley and admit service of papers?

You had better wire us instructions. We only had a few minutes to
glance at the papers before the office closed for the day.

Yours very truly,

Not. 12, 1901,

Howard W, Hayes, Esq. ,

Newark, N. .T.

Dear Sir:

I have your two letters dated Not. 8th, enclosing communica¬
tions from Mr. Samuel R. Church, your correspondent at Washington, B.C. ,
together with the opinion in the case of Whitson against the Columbia
Phonograph Co. X discussed this quite fully with Mr. Edison yesterday
and he immediately stated that of course we would go ahead with the case
for a final hearing, which goes without saying.

As- I have already stated to you over the telephone, the Whitson
people are very weak indeed, and X do not see that it would he of any
benefit to us to endeavor to make any arrangement with them for an
indefinite period, so that your opinion, as to having them make their
peace with the Columbia Phonograph Co. and arranging for a decree by
consent, is fully approved by both Mr. Edison and ourselves.

Your suggestion, however, as to our sending a salesman, or even
one of my people down to see them so as to make thiB arrangement, I
do not consider hardly the thing. I think it would be far better if ’
you would send Mr. Pelzer down to take care of this, as I feel certain
that he could do it much better than if any of my people were to attempt
to do it. This 1b on the lines already telephoned you and I trust you
'will act accordingly. I. shall be glad to know the result, however.

I return you herewith the opinion which you enclosed, copy of

[FROM HOWARD W. HAYES]

o. Q •

Nov. 16,1901.

William E. Gilmore, Esq. , } -

National Phonograph Company,

Orange, N.J.

'Dear Sir;- In re Whitson oase.

Mr. Pelzer was at Washington yesterday and had an inter¬
view with the Whitsons in reference to dropping the milt. He ad-
viBod thf.em.that the National Company did not oars to pursue the oase
any further and that sine* the WhltaonB ware under an injunction and
would remain 00 for an indefinite period pending the final disposition .
of the oase with the possibility of the injunction "being mad* permanent
after final hearing, it would he "best for them to accept the terms
of the" Columbia Company. He further urged them to do this at onoe
e3^e they are anxious to o.6nt±h&.fcthhe bu sines e of handling talking
raaohines, and in order to accomplish this, Mr. Pelzer advised them to
arranged with the Columbia Con© any to enter a consent final decree, but
to insist on a waiver of costs and damages. Mr. Pelzer also pointed
out to them that this step oould be taken in e^ire good, faith and
that they would still retain the good-will of the National Company,

The Whitsons, however, refused to enter into the matter for the reason
that, as they olaim, the National Company has not aoted in good faith
.with them and before doing anything would submit the matter to their
own counsel.

Their poBltion is this: At the time Mr. Gardner of your Com- •
pany saw. them in reference to handling the phonograph in Washington,
they were handling the Columbia goods and as an inducement to entering

Into a oon tract with the National Company, Mr. Gardner agreed on be¬
half of the National Company to re-imburse than for any loss they
might incur through their failure to Bell machines in case they should
be tied up by suit, whioh it was well understood at the time, would
be instituted immediately by the Columbia Company, They further
state that they have been advised that immediately after their accept¬
ing the National Company's terms, Mr. Gardner communicated the fact
to the Columbia people, whereupon they were interviewed by them with
the result that the Columbia goods were taken out of their hands at
once and Immediate steps taken to bring suit. They further assert
that thoire seeder was considerably delay in tho filling of their or¬
der by the National Company and that they wore unable to do any busi¬
ness to speak of before the injunction was Issued against them, and
of oourse have not done any business since. They further olaim that
before the deoision of the lower court was affirmed, they had a fair¬
ly good offer from the Columbia Company to handle their goods, but ,
of course, not as good an arrangement as they originally had; and now
that the decision was affirmed, they feared that they would be unable
to make any terms with the Columbia Company. So that on the whole
their entering into a contract with the National Company has injured
them to a oonBiderable extent.

What theyderaand/therefor«/is>f that they be .^e-lmburaed
for the loss that they sustained. On behalf of the National Company .
Mr* Pelaer insisted that he never heard of never knew of the National
Company making any suoh agreement with a dealer, further than if suit .
was brought the Company would undertake tho defenoe of the suit apd

W.E.G, 3j

pay the direat costs, but under no circumstances til dim "' !iifiiv.v H'!T*7ln
ttrvauBBunwtens the Company JW guarantee a dealer against loss due to
tha bringing of a suit. They admitted, of ooursa, that they had no
agroernont in writing, but that Mr. Gardner orally agree d to do this
as an inducement sfcrOtHaaset&a go into the business. After warning
them that any delay in making their peace with the Columbia Company
would bo a Iobs to them and not to the National Company, the ihte.r-
viow terminated with -the- understanding that the Whitsons would See
their own counsel and subsequently submit a statement of what they
consider to bo the extent of their loss.

So far as- the National Company is concerned, there is no
need of taking ray further steps in the matter until the time for ■
arguing the demurrer whioh was filed against the bill. ThiB matter ;

will probably' not cor

! irp until sometime in December,

Yours very trulyj

Navmrk, W.J., April l?, 190/5.

Messrs Har(.-car.tle Wynnj
1 St. Fanl fit, roof.,

Baltimore , Btl. ' '

Boar Biro:-

Confirming my tologram of to-day, please make appli-
oation^to .Tudco Porris on behalf of Sahloy to stay the injunction
pending appeal and state that you will take the appoal at .onoo,
perfect it as soon as possible, nr>d argue it at the earliest
possible clay. It would be a good idea to present at tho, motion an
affidavit from Rahley stating the voliunno of his business, mukfng
it, as small as possible, but at tho same time showing that as
small as it is, it is of groat, importance to him bocause his
other business in equally small and that without it ho could not
moot the expenses for rent, clerk hire etc., in his store. Also
stating.: that he keops accurate books of account anci expects to
continue to do so. Also stating that the Columbia Phonograph
Company doos not soil any phonographs and that therefore his soil¬
ing them is no injury to that Company. I suggest this as a
general line of procedure to show that il would be ftnjust to .konp
him shut up pending the appeal.. I Will prepare the appeal pa¬
pers at onco. In making this motion, If would be well to have it
appear that you am doing it entirely for Rahley* s benefit and not
at the instance of the national Fhonograph Company. ’ •

I think kkK a bond of $1000. is sufficient., especially

H.fc.’

i\» tho Judge has fixed that, as the amount Rahloy would ho damaged
by the preliminary injun ct.ion if ho suocoods at final hearing.

Tho tiati'onal Surety Oompany will give the bond and also will, gh
on tho Anon, bond no cos nary for the appeal. 1 will arrange with
thoir representative hero to instruct their representative thnro
t,o sign tho bonds when prosnntod to him. I presume that, they are
authorised t,o do business in Maryland and are acceptable to the
Court. ,

Yours very truly.

Nov/ark,

April 19,190?.,

Messrs Hardoastlo ft v/ynn,

1 Rt. Paul fit root.,

Baltimore, Kd.

Boar Rirr.:-

I bog t, o hand you appeal papers in tho Rahloy case.

I hove insortoc! tho amount of tho bond as $500., which is tho cus¬
tomary amount. I pro sumo Judge Morris will fix.it at, that, amount.
Floaso fill in.t.ho date of t.ho order. 1 have forgotten what the
histrict. number of your Oirnuit Court of Appeals is so', I loft that
out and also the placo where the Court, slats. Those, of course,
should be f .tiled in.

Judgo Korris fell into one very important. mistake in
his decision. Ho told that, tho national Phonograph Company is the
. SRCcessor of tho North Amorioan Phonograph Company and is bound

VV'Vv^y

bF it(B contracts. There is no evidence in support of that except.
thn nskocl allocation of the bill. While on the other hand, our
affidavits show conclusively that the Hat i onal Phonograph has had
nothing to do with the North American Fhonograph Company and. that
all it over did was to buy from tho receiver a portion of t.ho ass
sets of t.ho North American Company. 1 do not presume, however,
that, Judge Morris would be willing to have a re-hearing on .that
point. The legal effect, of tho purchase by one corporation of a
portion of the assets of another at a receiver’s sale, was not

;• : • ” .f: :■■■'

considered or di sous sod at. thohoaring. I imagine that, on account
of tho length of time that had elapsed between the argument, and
the decision the case had gotten out of Judge Morris' mind and in
writing his decision he did not go through the long affidavits
but took i< for granted that tho allegations of the bill were sup¬
ported by proof. As soon as you ascertain the amount of tho bond
X will arrange to hove tho American Surety Company's representative
in Baltimore sign it as surety. .

Vours very truly,

*9*

April, 26th., 1902.

Howard. W. Hayes, Esq.,

Newark, N.J.

Dear sir:-

judge Morris gave us a hearing this morning on the motion to,
stay the injunction pending appeal. Mr. Cook appeared for the plaintiff
and streneously resisted the motion. The Judge was disposed to refuse*
the motion at first, but after we had oalled^his notice -be a number of
things connected with the case, that seemed to have etscaped him, he took
the matter under advisement and promised to decide it on Monday morning.

We recalled to his attention particularly the contract made
by the North American Phonograph Company with the Columbia Phonograph
Company, wherein it is expressly stipulated, t ha'' Phonographs and Graph-
aphones were both to be placed upon the market, and their sale pushed with
equal vigor by the Columbia Phonograph Company. We will hear from the^
Judge on Monday and will then let you know the result.

The judge showed very plainly this morning that he had been
strongly influenced in his deoision by the decision of the District of
Columbia tfourt . Another thing, that sticks fast in his mind, is that
the contracts expire next year.

We expected to need the bonds this morning, and sent for the agent
of the American Surety Company, he hdd a letter, which had been sent to
Chicago, Illinois, by mistake, but in that letter he was instructed to
ascertain what we would need, and then refer the matter, to the home office.
That is the reason we telegraphed you.

C/fa/tf^u^. *

H. W. „. #3. #A»*^ April, 36th., 1902.

If Judge Morris grants our motion, we will want to file the bond,
at onoe . In. any event , we will need the bond for costs .

We told the agent here that he must get himself in shape by
Monday morning aat ten o'.olook.

Yours very truly,

A.H .Jr./J.F.W.

Howard W. Hayes, Esq.,

Hewark, H. J.

Dear Sirj

One of the Whit son Bros, called In to see me about a week or
ten days ago and made the statement that they are absolutely Btopped
from doing any business whatever and have been. for a very long time.

They asked me whether they would have to wait until the contract between
the Horth American Phonograph Co. and the Columbia Phonograph Co.
expires. I told them this was something that I was not at allfamiliar
with but that 1 would communicate with you. They seem to be very much
hurt from the fact that they have been unable to do any business during
this Holiday season, but of course I talked to him very kindly and
arranged to send them a phonograph outfit for their own use, etc., and
so fixed it up. I should like to hear from you relative to this matter,
however, immediately you get back.

WEC/lW

President.

COLUMBIA PHONOGRAHH COMPANY )

) IH THE CIRCUIT COURT OP THE
vs )

) UNITED STATES

NATIONAL PHONOGRAPH COMPANY )

) FOR THE DISTRICT OP MARYLAND,
and WILLIAM J. RAHLEY, indi- )

)

vidually and as agent of said ) No. 51 Eq. "D".

NATIONAL PHONOGRAPH COMBANY. )

DOCKET ENTRIES .

3 April 1901.

6 April 1901.

IS April 1901.

6 May 1901.

same day.

BiliL^pComplaint , Exhibit, Affidavits and Motion
papers, filed.

Order of Court for hearing application for preliminary
injunction on 19 April 1901; deft, to file affidavits
in reply Ly 16 April, and pltff to file affidavits
in rebuttal by 18 April, filed.

Subpoena issued/ Re tble . 1 Monday in May next. Copy
Bill of Complaint, Exhibit, Affidavits, Motion papers
& Order for hearing sent with Spna . ("Summoned the
National Phonograph Company by service on William J.
Rahley, its Agent; and summoned William J. Rahley,
individually and a6 Agent of the National Phonograph
Company, and two copies of subpoena, & copy of 3ill
of Complaint , Exhibit, Affidavit, Motion papers and
Order of Court left with him 8 April 1901")

Separate Affidavit^ of William J. Rahley, William E.
Gilmore and Cassell Severance with accompanying ex¬
hibits marked respectively, Defendant's Exhibit 1 &

1 "A", Defendant's Exhibits 2, 2A, 2B & 2 C, Defen¬
dant's Exhibit 3, Defendant's Exhibit 4, Defendant's
Exhibit 5 and Defendant's Exhibit 6, filed.

App. of Hardcastle & Wynn, for William J .Rahley,

Order filed.

Special App. of Howard W. Hayes on behalf of National

8 May 1901.

13 May 1901.

same day.

saa€day

25 May 1901.

3 June 1901.

26 June 1901.

12 April 1902.

21 April 1902.
| 26 April 1902.

Phonograph Co . Order fd .

Mo. to strike out Marshal's return of summoning
Natl. Phonograph Co. and Order (dated May 7, 1901)
setting same for hearing on 25 May , filed. C opy sent.
"Service admitted".

Affidavit of William .T. Rah ley in support of Mo. of
Natl. Phonograph Co. to set aside the Marshal's
return, filed.

Affidavit of William E. Gilmore in support of mo. to
set aside service, filed.

Affidavit of Philip Maftro andcopy Agreement annexed
on behalf of complainant , fd.

Affidavit of Howard W. Kayes, fd.

Order of Court strking out and setting aside return
of Marshal so far as it returns the National Phoho-
graph Company "summoned", filed.

Demurrer of William J. Rahley defendant to Bill of
Complaint, filed.

Petition of Plaintiff and Order of Court thereon
setting demurrer for hearing on 7 Oct. 1901, filed
"Service admitted" .

OpinicJtpn application for a preliminary injunction
filed . 1 -

Order of Court granting a preliminary injunction
against William J. Rahley, filed.

Petition of William J. Rahley for allowance of an
appeal from interlocutory order of 21 Apl. 1902;
Assignment of Errors and Order of Court allowing an
appeal as prayed and amt. of appeal bond fixed at
$500. fd.

same day.

'■ same day

28 April 1902.

30 April 1902.
same day

28 May 1902.
same day.

27 June 1902.

Motion of defendant William J. Rahley to stay pre¬
liminary injunction, pending appeal, upon filing
bond, filed.

Affidavit of Win. J. Rahley in support of mo. to stay
prely injunction, fd.

Order of Court denying mo. of deft. Rahley to stay
preliminary injunction pending appeal, filed.

Appeal Bond approved & filed.

Citation issued Retble . 29 May 1902, "Service
acknowledged" .

Stipulation regarding record, fd.

Order of .Ogitrt extending time for filing record in
U. S. Ct. Ct. of Appeals, filed.

Record transmitted to U. S. Ct . Ct . of Appeals.

UNITED STATES 01’ AMERICA,

DISTRICT OR MARYLAND , to wit:
i/ James W. Chew, C&rk of the Circuit Court of the United
States for the District of Maryland, do hereby certify that the
foregoing is a true copy of the Docket Entries, in the therein
entitled case.

CHURCH & CHURCH,

McGill Building,

908 G Street N.W.

Washington, D. C. March 15, 1904.

Mr. Prank L. Dyer,

Edison Laboratory,

Orange, N.J.

Ny dear Mr. Dyer:-

I have carefully examined the record and
briefs in the oase of Columbia Phonograph Co. vs. .Whitson
et al..

1 think the case was wrongly decided both by
Judge Bradley and by the Court of Appeals, but I doubt • jf,by
a showing of mere affidavits we can hgw gbt a, -new" Judge t'o
disturb the status quo.

It seems to me that it would be wise and entirely
safe to get an order limiting the times for taking testimony
and force the plaintiff to its proofs. If it fails to
make a prima facie oase, as I believe it will, we oan, if
we wish, then move to dissolve the injunction, without await¬
ing the putting in of full proofs on our side.

The only point that we now have available that’ was
not fully or, at least, partially presented to Judge Bradley,,
and to the Court of Appeals, is the expiration, by limitation
of the rights of the Columbia Company, if any they ever had.
as against the National Co. If we raise the point on a

motion for dissolution of the injunction we will have to, in
effect, prove a negative; but if we require the plaintiff to

Dyer— 2

go ahead with its pr ima -fade oase it will have to show
affirmatively the extension of the license. \

The case is a peculiar one and unless I am very \

much mistaken the Court will not disturb the present situa- i
tion unless/upon full proofs, regularly taken, it shall appear
that the plaintiff has not the rights that Judge Bradley thought
it might have.

Yours truly, •

CHURCH & CHURCH,

McGill Building,

908 G Strict N.W.

Washington, D. C. Aptfll 7, 1904.

Mr. P. 1. Ifirer,

E di so n Labo rat ory , Columbia Co. vs. Whitson, et al.

Orange , E. J.

1 for dear Mr. Eyer:-

Yours of the 5th received. I enclose
cony of a letter received this mtroning from I.lr. Mauro 'an'&Ofc

j / Al..:-

also a copy of my reply thereto. I see no reasojn y/hy^gre should
not he prepared to proceed with the testimony 4po^reB6ona^3e
notice. Are there any stipulations that you are v/ilii'ng’t 0

have me make? Why shouldn’t I tell Mauro to go ahead end
prove., his case in the usual way. I am not inclined to he
too easy in the natter of stipulations. Let me hear prompt¬
ly from you if you please, as I wish to make Mr. Mauro a

definite answer.

[ENCLOSURE]

COPY.

Apr. 6, 1904.

Melville Church, Esq.,

McGill Bldg. ,

City.

Bear Mr. Church :-

Columbia Phonograph Co, v. Whitson.

1 have yours of the r>th inst. enclosing copy of the
Order entered in this case, limiting and apportioning the
time. I send you herewith copy of brief on appeal, as re-
que sted.

On reading the Bill and Answer, I see that the
denials of the Defendant will make it necessary to prove a
number of agreements, and other matters, which will necessi¬
tate the taking of proof in and near New York City. In order
to get our proof in within the time limit, you must be pre¬
pared to attend, at short notice, sessions for taking
testimony at such places.

Possibly we may, by stipulation, save expense and
time in taking the proofs. I suggest that you decide on what
points you wish to contest the case and advise ms promptly
what stipulations you can make. I am going to New York to¬
night and will, while there, make arrangements for taking tes¬
timony, so that it wouldbe well if you could give this matter
prompt attention.

Yours very truly,

PHILIP MACRO.

[ENCLOSURE]

Philip Hauro, Esq.,
620 F St.,
City.

% dear Mr. Mauro:-

April 7, 1904.

Columbia Phonograph Co. vs.
_ _ 'Vhitson , et al.

Yours of the 6th instant received. 1
think ve can attend at any time and place if you will give us
reasonable notice. Just what stipulations we can make
to shorten the proceedings I am not prepared, off-hand, to
say. I will, however, prompt ly_ look. into the matter and
advise you. The probabilities are however, that 1 shall
desire to have you proceed in the usual-my.

Very tru3y yours,

Columbia Co.vs. TBhitson at el

April 8th, 1904,

Melville Church, Esq. ,

908 G Street,

"Washington, D.C.

My dear Mr. Church:-

Your favor of the 7th inst. has been
received in reference to this case, with oopies of Correspond¬
ence with Mr. Moure. The defendants in this case are ™n
dealers, and it is not particularly important whether the in¬
junction continues, against them or not. It is, however, im¬
portant that the status of the Columbia Company should be
definitely Battled. 3?or this reason, I think Mr. Mouro should
make out his case without the assistance of stipulations from
us, and suggest that you write him to this effect. I know
more or less about his engagements and feel reasonably certain
that nothing can be done by him personally until sometime next
month.

IT.D/AHK,

Very truly yours,

NEW YORK, April 20, 1904 o

Prank L. Dyer, Esq., ^'^'V

Orange, N. J. '

Dear Mr. Dyer:-

With reference to the suit of Columbia Phonograph Co. vs.
Whitson, you have of course been advised of the order entered by
stipulation to the effect that complainant should put in its priina
facie proofs by May 15th. I find that owing to final hearings, tes¬
timony in the molded record suit, etc., it will be impossible for me
to take the testimony within that time. I do not like to ask Mr.

Church for an extension of the time, and in fact he .1b bo new to the
case that he does not understand the situation. I should like to
have the time extended for at least thirty (30) days. One main rea¬
son why I ask this extension is that I want an opportunity of dis¬
cussing this situation with you in person, as I believe it can be
disposed of to the satisfaction of everybody without further litiga¬
tion. When I come to’ Orange to cross-examine you in molded record
case No. 1103 we can have a discussion of this case, as well as the
Hahley case. in Baltimore.

Yours very truly.

Whitson, Rawley and Helm April 29, 1904

cases. ,

Phillip Hauro, Esq. ,

277 Broadway,

Hew York City.

Bear Mr. Kauro:-

In accordance with our understanding yesterday,

I am. Just writing' Mr. Hough who haB charge of the several Helm
cases in Hew York, to prepare orders to discontinue the suits, and
when prepared, I will submit them to you for your approval.

If you will draw up corresponding orders in the
Whitson and Rawley suits, providing specifically for a dissolution
of the injunctions, I will approve them. The orders can then he
filed in all the cases.

Your early attention to this matter will he appreciat¬
ed, as I wish to make use of the dissolution ££ the injunctions In
Washington and Baltimore at the argument of the Hew York Phonograph
case, an^'for the same reason I wish you would write me a letter
such as suggested by you yesterday, expressing as your opinion the
expiration of the contract rights under the original Bippincott a-
greements on Maroh 26, 1903. The u^'de rst ending which I had from
you yesterday, and whioh I now beg to confirm, is that neither your
clients nor mine will seek hereafter to enforoe any alleged rights

P. Mi No. 2

under the original Lippincott agreements, and that the territory
now occupied hy the Columbia Company be open to us..

Yours very truly,

siro/inr.

April 29, 1904

C, M. Hough, Esq..,

79 ^ill^treet, * ' •

Hew York City.

Dear,Sir:-

I have,., just made an arrangement with Hr. Hauro, Coun¬
sel for the American Graphophone Company, under which he agrees
to have the 'Whitson and Hawley cases discontinued and the injunction
against us in Washington and Baltimore dissolved, provided we
discontinue the several Helm suits pending in lfaw York and under
your charge. If you will prepare the proper orders to have the
Helm cases discontinued, I will submit the same to Hr. Kauro^ and

make the exchange with him. .

The arrangement seems to me to he desirabifl, -Mcause '
the Helm cases were hopeless, and. the lifting of the injunctions
in .Washington and Baltimore can he favorably commented upon at
the: argument in the Hew York case.

HUD /m..

Yours very truly,

PHILIP MAURO,
Counsellor at Law,

Prank L. Dyer, Esq. ,

31 Nassau St., City.

Dear Sir:-

May 5, 1904.

I have heen unahle before this to reply to your let¬
ter of April 29th with reference to the suits of the Columbia
Pho. Co. against Rahley and the 3ame against Whitson.

As I have stated to you orally, I am billing to dis¬
continue these suits, but wish to have it distinctly understood
that I regard the Columbia Pho. Co's license as having been in
full force at the time the suits were begun. My reason for dis¬
continuing the actions is that I cannot see clearly my way to

establishing the continuance of the license after March 26,
1903. Por this reason I am willing to discontinue the actions
without costs.

I enclose herewith orders to this effect, which you
can have entered.

Yours very truly,

Dict.P.M.

Columbia Co. vs . Whitson, etal. Kay 6, 1904.

Melville Church, Esq.,

908 G - Street,

Washington, D. C.

Dear Hr.' Church

Hr. Hauro spoke to me the other day about this
case, and it was agreed that it should be discontinued. In sending
me the enclosed order he says - “My reason for discontinuing the
notions is that I cannot see clearly my way of establishing the
continuance of the license after March 26, 1903".

Kindly sign the order as solicitor and have
the same entered. In view of this termination of the case, my
only surprise is that it was not done a year ago.

Yours very truly,

sii /im.

Enc. ,

CHURCH & CHURCH,

Washington, D. C. ^ »

1904.

Mr. Frank L. Dyer,

C/o Edison Laboratory,
Orange, N.J.

My dear. -Mr. Dyer: COLUMBIA CO. vs, WHITSON ET At ,-H N, \

Yours of the 6th inst., enclosing form of or^r/^smiss-
ing the hill in the above case, with Mr. Mauro » s' approval' endorsed
thereon, v/a3 received this morning. On Monday I will have the
order entered. Am very glad indeed to learn that our
scheme worked. It was a very much less expensive proceeding
than to get up a lot of affidavits, and have a hearing, on an
application to dissolve the injunction. I congratulate you
upon the result..

Yours truly,

P.S. I suppose Mr. Moore is still lucubrating,

Columbia Co.vs. Whitson,

et al,

1904

May 9,

;'/■

Melville Church, Esq., : /

908 6 — Street, /

•Washington, D. c. / ■

Dear Mr. Church:-

Your favor of the 7th inst. ie received, and
I note that you will have the order in the above case entered to¬
day. Your suggestion of limiting complainant's time for taking
testimony was certainly much less expensive than my idea of hav¬
ing the injunction dissolved. ;

Br the way, 1 am considering the practicability of
securing a fradd order in the Post office Dept, against a concern
that is making a very unfair use, of Mr.' Edison's name. Would you
care to help me out on such a case? ’ i /. . •

• , Yours very truly, ,

PUBLICATION AND MICROFILM
COPYING RESTRICTIONS

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A Note on the Sources

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224

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